In chapter 6, Bond Valuations techniques are introduced
A bond is a debt security, like ‘IOU.’
The bond issuers borrow from the Bond Investors.
The issuers agree to repay the principal amount of the loan on the maturity date.
Thus, a bond represents loans from the holder to the issuer.
In this assignment, you are to discuss at least 5 of the following with numerical examples:
What are the features of a zero-coupon bond?
Explain the concept of Zero Coupon bond yields and its pricing behavior
What are the features of a coupon bonds?
Explain the concept of Coupon bond yields and its pricing behavior
Discuss the ‘Term Structure of Interest Rates’ and how it related to the Yield Curve
What are the different shapes of the yield curve
What are the determinants of the shape of the yield curve
What does it mean when a bond sells at a premium or when it sells at a discount?
Discuss the relation between a corporate bond’s expected return and the yield to maturity; define default risk and explain how these rates incorporate default risk.
Assess the creditworthiness of a corporate bond using its bond rating; define default risk
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