第5公司理财 高斯中文ppt课件章.ppt

* Note that this example illustrates a discount bond (i.e., coupon rate is smaller than the required yield). * The students should be able to recognize that the YTM is more than the coupon since the price is less than par. * This is the same information as the YTM calculation on the previous slide. The YTM computed on that slide was 8% * Please note that you have to have the analysis tool pack add-ins installed to access the PRICE and YIELD functions. If you do not have these installed on your computer, you can use the PV and the RATE functions to compute price and yield as well. Click on the TVM tab to find these calculations. * This is standard terminology in the US, but it may not transfer to other countries. For example, debentures are secured debt in the United Kingdom * Debenture: secured debt is less risky because the income from the security is used to pay it off first Subordinated debenture: will be paid after the senior debt Bond without sinking fund: company has to come up with substantial cash at maturity to retire debt, and this is riskier than systematic retirement of debt through time. Callable – bondholders bear the risk of the bond being called early, usually when rates are lower. They don’t receive all of the expected coupons, and they have to reinvest at lower rates. * It is a good exercise to ask students which bonds will have the highest yield-to-maturity (lowest price) all else equal. Debt rated C by Moody’s is typically in default. * You should be willing to accept a lower stated yield on municipals because you do not have to pay taxes on the interest received. You will want to make sure the students understand why you are willing to accept a lower rate of interest. It may be helpful to take the example and illustrate the indifference point using dollars instead of just percentages. The discount you are willing to accept depends on your tax bracket. Consider a taxable bond with a yield of 8% and a tax-exempt municipal bond with a yield of