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## INTEGRATED FUNC SYSMKTG

by: Mrs. Oleta Okuneva

36

0

4

# INTEGRATED FUNC SYSMKTG COB 300

Mrs. Oleta Okuneva
JMU
GPA 3.74

Stanmore Marshall

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COURSE
PROF.
Stanmore Marshall
TYPE
Class Notes
PAGES
4
WORDS
KARMA
25 ?

## Popular in College of Business

This 4 page Class Notes was uploaded by Mrs. Oleta Okuneva on Saturday September 26, 2015. The Class Notes belongs to COB 300 at James Madison University taught by Stanmore Marshall in Fall. Since its upload, it has received 36 views. For similar materials see /class/214044/cob-300-james-madison-university in College of Business at James Madison University.

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Date Created: 09/26/15
Dr Marshall Finance COB 300 0 DP0 91gt Chapter 7 Homework Solutions Chapter 7 Interest Rates and Bond Valuation Created 1 22 08 PM EDT The stated interest payment in dollars made on a bond each period is called the bonds coupon face value maturity yield to maturity coupon rate The principal amount ofa bond that is repaid at the end ofthe loan term is called the bonds coupon face value maturity yield to maturity coupon rate The specified date on which the principal amount ofa bond is repaid is called the bonds coupon face value maturity yield to maturity coupon rate The rate of return required by investors in the market for owning a bond is called the coupon face value maturity yield to maturity coupon rate The annual coupon ofa bond divided by its face value is called the bonds coupon face value maturity yield to maturity coupon rate A bond with a face value of 1 000 that sells for 1000 in the market is called a bond par value discount premium zero coupon oating rate A bond with a face value of 1 000 that sells for less than 1000 in the market is called a 0nd par discount premium DPIOU DPPIN DP9939gt DIUF P39P IMP90quot OIEUP e DPIOU DPFUN DP9939 DPIOU meovw39 ewovw39 zero coupon oating rate A bond with a face value of 1 000 that sells for more than 1000 in the market is called a bond par discount premium zero coupon oating rate The written legally binding agreement between the corporate borrower and the lender detailing the terms ofa bond issue is called the indenture covenant terms oftrade form 5140 call provision The form of bond issue in which the registrar ofthe company records ownership of each bond with relevant payments made directly to the owner of record is called the form newissue registered bearer debenture collateral The form of bond issue in which the bond is issued without record of the owner39s name with relevant payments made directly to whoever physically holds the bond is called the form newissue registered bearer debenture collateral The unsecured debts of a rm with maturities greater than 10 years are most literally called unfunded liabilities sinking funds bonds notes debentures The unsecured debts of a rm with maturities less than 10 years are most literally called unfunded liabilities sinking funds bonds notes debentures In the event of default debt holders must give preference to more debt holders in the priority of repayment distributions IMP90quot wwovw39wemvw39weomw IMP90quot neom 20 DPPIN 21 939 shortterm longterm longterm shortterm senior junior senior subordinated subordinated senior An agreement giving the bond issuer the option to repurchase the bond at a speci ed price prior to maturity is the provision sinking fund call seniority collateral trustee The amount by which the call price exceeds the bonds par value is the coupon rate redemption value call premium originalissue discount call rate A deferred call provision refers to the open market price ofa callable bond on a certain date seniority of callable bonds to noncallable bonds in the event of corporate default prohibition of a company from ever redeeming callable bonds prohibition ofa company from redeeming callable bonds priorto a certain date amount by which the call price for a callable bond exceeds its par value Parts ofthe indenture limiting certain actions that might be taken during the term ofthe loan to protect the interests ofthe lender are called trustee relationships sinking funds provisions bond ratings deferred call provisions protective covenants The longterm bonds issued by the United States government are called Treasury municipal oatingrate junk zero coupon The longterm bonds issued by state and local governments in the United States are called bonds Treasury municipal oatingrate junk zero coupon A bond which at the election of the holder can be swapped for a xed number of shares of common stock at any time prior to the bonds maturity is called a bond zero coupon callable bonds DIU0 22 DPPIN 23 DPIOU 24 DIUF P39P 25 DIUF P39P 26 DP0 91gt 27 IMP90quot 28 QQIUJP putable convertible warrant The annual coupon payment ofa bond divided by its market price is called the coupon rate current yield yield to maturity bidask spread capital gains yield The price a dealer is willing to pay for a security held by an investor is called the equilibrium price ask price bid price bidask spread auction price The price a dealer is willing to accept for selling a security to an investor is called the equilibrium price auction price bid price ask price bidask spread The premium is that portion ofa nominal interest rate or bond yield that represents compensation for expected future overall price appreciation default risk taxability liquidity inflation interest rate risk The premium is that portion ofa nominal interest rate or bond yield that represents compensation forthe possibility of nonpayment by the bond issuer default risk taxability liquidity in ation interest rate risk All else constant a bond will sell at a premium higherthan a premium equal to at par higherthan at par less than a discount higherthan Callable bonds generally allow the bondholderto decide when the bond is to be called are associated with sinking funds permit the issuer to repurchase the bonds at a discount are called within the rst couple of years after issuance when the yield to maturity is the coupon rate

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