Useful Definitions and Information About Bonds

In: Business and Management

Submitted By anhnguyen
Words 726
Pages 3
Useful Definitions and Information about Bonds

Here is some terminology to remember:

Bond: Long term debt instruments issued by corporations or governments
Face Value (or par value or maturity value): The promised repayment at the end of the loan
Coupon: The regular interest payments promised by the bond issuer
Coupon Rate: Annual coupon payment divided by the face value
Time to maturity: Number of years remaining to the face value payment (notice that ‘time to maturity’ for a bond decreases as time passes since the maturity date is a fixed, pre-determined date)
Yield to Maturity (or required return or market rate): The rate of return that is required by the market for the bond at hand. Don’t be surprised to observe that the Yield to Maturity (YTM) may differ from the Coupon Rate in many occasions. This happens since coupon rate is fixed over the term of the bond, but YTM is a dynamic figure that is shaped by factors relating to the bond issuer and/or the general economy (e.g. interest rate movements in the economy or changes in the default-risk of the issuer).

More formally, a bond is evidence of debt issued by a corporation or a governmental body. A bond represents a loan made by investors to the issuer. In return for his/her money, the investor (or bondholder or lender) receives a legal claim on future cash flows of the borrower.

The issuer promises to:
- Make regular coupon payments every period until the bond matures, and
- Pay the face/par/maturity value of the bond when it matures.

Default - since the above mentioned promises are contractual obligations, an issuer who fails to keep them is subject to legal action on behalf of the lenders (vs. unlimited liability in equity markets).

The features of a particular bond are specified in a legal document called ‘indenture’. The indenture specifies the usual characteristics of a bond (face…...

Similar Documents

Information About Usa

...archipelago in the mid-Pacific. The country also possesses several territories in the Pacific and Caribbean. At 3.79 million square miles (9.83 million km2) and with over 314 million people, the United States is the third- or fourth-largest country by total area, and the third-largest by both land area and population. It is one of the world's most ethnically diverse and multicultural nations, the product of large-scale immigration from many countries. Paleoindians migrated from Asia to what is now the United States mainland around 15,000 years ago. The descendent and isolated Native American population was greatly reduced by European contact, primarily by disease brought by explorers and traders. European colonization occurred, beginning about 1600, chiefly from England. The United States emerged from thirteen British colonies located along the Atlantic seaboard, which developed their own economies and democratic political systems. Patriots protested at British intrusions into taxation policies that Americans considered their rights, leading to war in 1775. On July 4, 1776, delegates from the 13 states to the Continental Congress unanimously issued the Declaration of Independence, which established the United States of America. The new nation, in alliance with France, defeated Britain in the American Revolution It was the first successful war of independence against a European empire. The current United States Constitution was adopted on September 17, 1787; its......

Words: 681 - Pages: 3

Organization Information About Needs

...Organization Information about needs-Discover consumer needs-concepts for product-satisfy consumer needs (product,price,promotion,place)-goodd,servise,ideas-the market; Supplies-organization(Marketing department, other departments, employees)-customers Social (demographic, cultural changes) Economic (macroeconomic condition, consumer income) Technological (changing technology, technology’s impact on customer value, electronic business technologies) Competitive(alternative forms of competition, small businesses) Regulatory (Laws protecting competition, laws affecting marketing mix actions, self-regulation) Indentify market needs (benefits in terms: Product features, expense, quality, saving in time and convenience)-link needs to actions(take steps to segment and target markets)-execute marketing program actions( a marketing mix: product, place, price, promotion). 1. New-product strategy 2. Idea generation. 3. Screening and evaluation. 4.business analysis. 5. Development. 6. Market testing 7. Commercialization. Target market-potential consumers. Marketing mix-product,price,promotion,place. Environment forces-the uncontrollable social,economic,technological,competitive that affect the result of marketing decision. Customer value- buyer’s benefits before and after-sale service. Marketing concept-an organization should satisfy consumers and achieve its goals. Marketing orientation- collect and use info about customer’s needs to create customer value. Social marketing......

Words: 659 - Pages: 3

Bonds

...Bonds are appealing to investors because they provide a generous amount of current income and they can often generate large capital gains. These two sources of income together can lead to attractive and highly competitive investor returns. Bonds make an attractive investment outlet because of their versatility. They can provide a conservative investor with high current income or they can be used aggressively by investors who prefer capital gains. Given the wide and frequent swings in interest rates, investors can find a variety of investment opportunities. In addition to their versatility, certain types of bonds can be used to shelter income from taxes. While municipal bonds are perhaps the best known tax shelters, some Treasury and federal agency bonds also give investors some tax advantages. Bonds are exposed to the following five major types of risk: (1) Interest rate risk: This affects the market as a whole and therefore translates into market risk. When market interest rates rise, bond prices fall, and vice versa. (2) Purchasing power risk: This is the risk caused by inflation. When inflation heats up, bond yields lag behind inflation rates. A bond investor is locked into a fixed-coupon bond even though market yields are rising with inflation. (3) Business/financial risk: This refers to the risk that the issuer will default on interest and/or principal payments. Business risk is related to the quality and integrity of the issuer, whereas financial risk relates to the......

Words: 15669 - Pages: 63

Microblogging Tools Such as Twitter Have a Useful Information Function in Business.

...Microblogging tools such as Twitter have a useful information function in business. ‘The Internet is becoming the town square for the global village of tomorrow’ (Gates 2003). Over the past decade we have witnessed this statement slowly coming to fruition. We are in the age of social media, networking, and more specifically in the business world; microblogging. How has this changed business so far, and what are its prospects for the future? I will be looking at its wide ranging effects, positive and negative, and plan on evaluating the story so far. I intend to analyse the applications for the small and large businesses, including the use of SMM (social media marketing) whilst looking at the pitfalls that people and companies have, and will continue to, come across. Many small businesses are taking advantage of the social networking scene by using it as their primary medium for updating their customers. It presents a unique opportunity to keep connected to customers, wherever they may be. Not only does the consumer benefit through keeping in touch with the stores products and availability, but they may also take advantage of ‘twitter only’ promotions. According to a recent survey of 1000 users of social networking, ‘44% of those following brands on twitter said they did so because of the exclusive deals the firms offered to users’ (Economist, 2010). Straight away it can be seen how the ever important business-consumer relationship is working. In return for free, willing...

Words: 1317 - Pages: 6

Information About Books

...help while doing this research. We would like to thanks all the students who have filled the questionnaire. We are also thankful to the university for providing us great opportunity for doing this research. Finally we would like to thanks to our friends for their support. Abstract This is very important to know the effects of littering and garbage throwing out of cars. Why people do this? They are just careless about everything. They even do not know that throwing trash harms our environment and it is also harmful for the animals too. There are too many bad effects. The people who do this have no respect at all. This can be habitual. We have noticed that teenagers throw trash out of cars just for fun. They usually enjoy doing this. To know about all this we have conducted a quantitative research. We have conducted a survey consisting of questionnaire. Our sample size was fifteen. We have asked nine close ended questions relating to this problem to gather data. One question was open ended in which we have noticed different thinking about this issue. After doing all this research we have concluded that Government should set a fine on this garbage throwing activity. Awareness campaigns can also help to highlight its bad effects on environment. Finally we as a citizen of our homeland must take responsibility to clean our environment and to take constructive steps to get rid from this issue. Table of Contents Acknowledgement 2 Abstract 3 1 -......

Words: 1678 - Pages: 7

Political Information About China

...according to a spokesman of the Committee on the One-Child Policy, approximately 35.9% of China's population was subject to a one-child restriction. The Special Administrative Regions of Hong Kong and Macau are exempt from the policy. Also exempt from this law are foreigners living in China. This policy was introduced in 1978 and initially applied from 1979. It was created by the Chinese government to alleviate social, economic, and environmental problems in China, and authorities claim that the policy has prevented more than 250 million births between 1980 and 2000, and 400 million births from about 1979 to 2011; this claim is disputed by two independent scholars, who put the number of prevented births from 1979 to 2009 at 100 million. The policy is controversial both within and outside China because of the manner in which the policy has been implemented, and because of concerns about negative social consequences. The policy has been implicated in an increase in forced abortions, female infanticide, and underreporting of female births, and has been suggested as a possible cause behind China's sex imbalance. Nonetheless, a 2008 survey undertaken by the Pew Research Centre reported that 76% of the Chinese population supports the policy....

Words: 253 - Pages: 2

Healthcare Information Systems Definition of Terms

...Definition of Terms Shaun W. VanDevender HCS/533– Health Information Systems Professor Derrick Dugeon September 1, 2014 Definition of Terms Technology has greatly changed health care in many different ways. This change has been gradual, progressing over several years; it has been very profound, nevertheless. Understanding these changes is important for experienced health professionals and newcomers alike. The following paragraphs will provide some definitions for the following important abbreviations: AMR, CMR, CMS, CMS-1500, CPT, DRG, EPR, HL7, ICD-9, and UB-92. In addition, the importance of each term will be discussed. AMR According to Techtarget.com an ambulatory medical record (AMR) is an electronically stored file of a patient’s outpatient medical records, which includes all surgeries and care that do not involve being admitted to a hospital. An AMR is similar to an electronic medical record (EMR) but while EMRs keep track of inpatient care (surgeries and care that require spending overnight or longer in a hospital), AMRs only apply to medical procedures and care that do not result in an overnight stay in a hospital or that are given in non-hospital settings such as urgent care clinics, physicians’ offices and at-home medical care. AMRs assure that patients receive appropriate care. AMRs provide clinicians information they need to get a complete picture of the patients health. In addition, consumers can use the health information in the AMR to better......

Words: 1601 - Pages: 7

Bonds and Their Evaluations

...Chapter 7(13E) Bonds and Their Valuation Answers to End-of-Chapter Questions 7-1 From the corporation’s viewpoint, one important factor in establishing a sinking fund is that its own bonds generally have a higher yield than do government bonds; hence, the company saves more interest by retiring its own bonds than it could earn by buying government bonds. This factor causes firms to favor the second procedure. Investors also would prefer the annual retirement procedure if they thought that interest rates were more likely to rise than to fall, but they would prefer the government bond purchase program if they thought rates were likely to fall. In addition, bondholders recognize that, under the government bond purchase scheme, each bondholder would be entitled to a given amount of cash from the liquidation of the sinking fund if the firm should go into default, whereas under the annual retirement plan, some of the holders would receive a cash benefit while others would benefit only indirectly from the fact that there would be fewer bonds outstanding. On balance, investors seem to have little reason for choosing one method over the other, while the annual retirement method is clearly more beneficial to the firm. The consequence has been a pronounced trend toward annual retirement and away from the accumulation scheme. 7-2 Yes, the statement is true. 7-3 False. Short-term bond prices are less sensitive than long-term bond prices to interest rate......

Words: 9484 - Pages: 38

Information About Banana

... Floorwax is still being used by some households in order to keep their floor shiny and presentable. It  usually comes in different forms (solid or liquid wax) depending on the user's preference. They are locally available and people can purchase one in the supermarket instantly.  Luckily, one could actually make an improvised floorwax with just used candles, kerosene, and banana peelings!                Used candles and banana peelings are considered waste materials. Normally, those materials are just thrown away after usage. But instead of putting them in the garbage bin, they can be recycled to make a new useful product like floorwax. Banana peelings contain potassium which is the ingredient found in shoe polish.             So, why not save up those used candles and banana peelings to create a less expensive, environmentally-friendly, and low odor floor polish? It wouldn't only give you a shiny looking floor, but it would also make you utilize waste materials to produce a valuable household item. [pic] Materials and equipment needed:  Used Candles              130 g*            (Due to insufficient amount of time in collecting used candles, new ones were utilized instead)              Banana Peelings          170 g* Kerosene                     260 mL* Can Hotplate Knife *Measurements used in the study.You can make your own variations. :) [pic] Melting of candles [pic] Adding of kerosene. This gives the right consistency of the wax. Of course you do not want......

Words: 324 - Pages: 2

Muncipal Bonds

...Municipal Bond Market Development Edited and with an introduction by: Priscilla Phelps, Senior Finance Advisor, Research Triangle Institute November 1997 Environmental and Urban Programs Support Project Project No. 940-1008 Contract No. PCE-1008-I-00-6005-00 Contract Task Order No. 06 Conducted by Research Triangle Institute Sponsored by the United States Agency for International Development Office of Environment and Urban Programs (G/ENV/UP) COTR Sarah Wines Finance Working Papers Table of Contents Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Part I: Municipal Bond Market Development in Developing Countries: The Experience of the U.S. Agency for International Development . . . . . . . . . . 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Changing Situation of Local Governments and Their Financing Options . . . . . 4 Defining Municipal Financial Market Development . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Strategic Context for Municipal Bond Market Development at USAID . . . . . . . . . . . 8 Technical Summary of Municipal Bond Projects . . . . . . . . . . . . . . . . . . . . . . . . . . 10 USAID......

Words: 43244 - Pages: 173

Marketing Research & Advertising - Identify Other Potential Sources of Information About the Weather.

...09901366442 – 09902787224 Marketing Research & Advertising Q1. Visit the Web site of The Weather Channel (www.weather.com) Write a report about the type of information available at this site. Q2. Identify other potential sources of information about the weather. Q3. Discuss the role of qualitative research in identifying consumer’s needs for weather-related information. Which qualitative research techniques should be used? Q4. If a survey were to be conducted to determine consumer preferences for weather-related information, which interviewing method would you recommend? Why? Q5. Can observation methods be used to determine consumer preferences for weather- related information? If so, which observational methods would you use? Why? Q6. What kind of research design would you recommend for determining the effectiveness of M & M/Mars advertising during the Super Bowl? Q7. If the research design involves a survey of households, which survey method would you recommend and why? Q8. What kind of measures and scales will you employ in your survey? Q9. Can the observation method be used to determine the effectiveness of M & M/Mars advertising during the Super Bowl? If so, which observation method would you recommend and why? Q10. Which syndicated services discussed in the book can provide useful information? The director of marketing for Chrysler is interested in knowing the psychological characteristics of the yuppies to configure the Dodge Viper...

Words: 1080 - Pages: 5

Advertising - Which Syndicated Services Discussed in the Book Can Provide Useful Information.

...banakar@gmail.com ARAVIND - 09901366442 – 09902787224 ADVERTISING 1. Visit the Web site of The Weather Channel (www.weather.com) Write a report about the type of information available at this site. 2. Identify other potential sources of information about the weather. 3. Discuss the role of qualitative research in identifying consumer’s needs for weather-related information. Which qualitative research techniques should be used? 4. If a survey were to be conducted to determine consumer preferences for weather-related information, which interviewing method would you recommend? Why? 5. Can observation methods be used to determine consumer preferences for weather- related information? If so, which observational methods would you use? Why? 1. What kind of research design would you recommend for determining the effectiveness of M & M/Mars advertising during the Super Bowl? 2. If the research design involves a survey of households, which survey method would you recommend and why? 3. What kind of measures and scales will you employ in your survey? 4. Can the observation method be used to determine the effectiveness of M & M/Mars advertising during the Super Bowl? If so, which observation method would you recommend and why? 5. Which syndicated services discussed in the book can provide useful information? The director of marketing for Chrysler is interested in knowing the psychological characteristics of the yuppies to configure the......

Words: 1078 - Pages: 5

Marketing Research & Advertising - Which Syndicated Services Discussed in the Book Can Provide Useful Information

...09901366442 – 09902787224 Marketing Research & Advertising Q1. Visit the Web site of The Weather Channel (www.weather.com) Write a report about the type of information available at this site. Q2. Identify other potential sources of information about the weather. Q3. Discuss the role of qualitative research in identifying consumer’s needs for weather-related information. Which qualitative research techniques should be used? Q4. If a survey were to be conducted to determine consumer preferences for weather-related information, which interviewing method would you recommend? Why? Q5. Can observation methods be used to determine consumer preferences for weather- related information? If so, which observational methods would you use? Why? Q6. What kind of research design would you recommend for determining the effectiveness of M & M/Mars advertising during the Super Bowl? Q7. If the research design involves a survey of households, which survey method would you recommend and why? Q8. What kind of measures and scales will you employ in your survey? Q9. Can the observation method be used to determine the effectiveness of M & M/Mars advertising during the Super Bowl? If so, which observation method would you recommend and why? Q10. Which syndicated services discussed in the book can provide useful information? The director of marketing for Chrysler is interested in knowing the psychological characteristics of the yuppies to configure the Dodge Viper...

Words: 1080 - Pages: 5

Health Care Information - Definition of Terms

...Introduction: There are a lot of abbreviations used in the United States health care delivery systems. A list of some of these abbreviations that are used by physician’s offices, hospitals, nursing homes, and other ambulatory care services are listed in this paper. 1. AMR - The definition of an Automated Medical Record, otherwise known as an electronic medical record, has been set forth by the 2003 IOM Patient Safety Report as the: • "collection of electronic health information for and about persons" • "provision of knowledge and decision-support systems [for] support for efficient processes for health care delivery" • "electronic access to person-and population-level information by authorized users" ("Definition Of Automated Medical Record", 2012).  2. CMR – According to "Mortality Frequency Measures" (2012), Crude Mortality Rate. The Crude Mortality Rate is the mortality rate from all causes of death for a population during a specified time period. • Mortality rates measure the frequency of occurrence of death in a defined population during a specified interval. • There are several specific kinds of mortality rates, but we will focus only on the ones that are used most often in infectious disease epidemiology. • To calculate a simple mortality rate, we need to know the number of deaths in a given population during a specified time period, and the size of the population in which the deaths......

Words: 1668 - Pages: 7

Research Paper About Management Information System

...Management Information Systems - Westminster College - Fulton, Missouri  Why Study Management Information Systems (MIS) at Westminster? * Our MIS program builds on the strengths of our Business and Computer Sciences offerings as well as our liberal arts education.  Classes blend theory and practice in “hot” areas—issues and technologies that researchers and practitioners are currently interested in. * Each class is uniquely designed for Westminster, in response to recent scholarly findings and rising trends in the field. * Courses are not technology driven, though technology is adequately integrated into the major.  Therefore, students never have to play catch-up with technology that is imposed externally.  Instead, all discussions are driven by business strategy and user needs.  * Majors become user and data advocates who understand that the most critical elements of an information system are not hardware and software, but the people and information. * Dr. Phelps, who designed and implemented the major, has degrees and research, and consulting experience in all of the relevant fields of MIS: business, decision science, computer science, and information technology.  So, “knowing a little about a lot” allows her to see the best benefits of these synergies and bring those synergies into the classroom. Major Highlights In your formal MIS studies, you will learn organized approaches to gathering, processing, and presenting information, in order to improve...

Words: 908 - Pages: 4