Key concepts in a bond

1 What is a bond?
2 Who can issue bonds?
3 Key terms assocaited with a bond
Face value
Coupon interest rate
Maturity date
Call provision
Convertibility
3 Bond valuation
4 Changes in bond's value over time
5 Yield to maturity - YTM
6 Bonds with semi annual coupons
7 Bond ratings
 Bond Valuations

1 The Morrissey Company's bonds mature in 7 years, have a par value of $1,000, and make
coupon payment of $70. The market interest rate for the bonds is 8.5%. What is the bond

2 D. J. Masson Inc. recently issued noncallable bonds that mature in 10 years. They have a
$1,000 and an annual coupon of 5.5%. If the current market interest rate is 7.0%, at what
the bonds sell?

3 Ezzell Enterprises’ noncallable bonds currently sell for $1,165. They have a 15-year matu
coupon of $95, and a par value of $1,000. What is their yield to maturity?

4 Consider a 15 year Bond that has 5.5% coupon, paid semiannaully. If the current market i
6.5%, Under what conditions would a trader decide to buy this bond?

5 In the Same problem, given the PV of the bond, find the bond's YTM?
ar value of $1,000, and make an annual
ds is 8.5%. What is the bond's price?

ure in 10 years. They have a par value of

interest rate is 7.0%, at what price should

5. They have a 15-year maturity, an annual

to maturity?

naully. If the current market interest rate is

s bond?