New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Chapter 6 Interest Rates & Bond Valuation

by: Chris Holder

Chapter 6 Interest Rates & Bond Valuation FIN 315

Marketplace > Finance > FIN 315 > Chapter 6 Interest Rates Bond Valuation
Chris Holder
GPA 3.28

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Includes class examples New and familiar terms such as Time Value of Money Terminology and Bond Valuation . Current Yield Yield To Maturity Yield To Call Investment Risk Callable Bonds
Business Finance
Dr. Milanese
Class Notes
FIN315, Bond Valuation, Interest rates
25 ?




Popular in Business Finance

Popular in Finance

This 3 page Class Notes was uploaded by Chris Holder on Tuesday April 5, 2016. The Class Notes belongs to FIN 315 at a university taught by Dr. Milanese in Spring 2016. Since its upload, it has received 54 views.


Reviews for Chapter 6 Interest Rates & Bond Valuation


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 04/05/16
Chapter 6 Interest Rates and Bond Valuation Time Value Bond Valuation Terms Terms A B C D n Maturity(years) 20 20 20 20 PMT Coupon rate 8% 6% 10% 0% $1,00 $1,00 $1,00 FV par value 0 0 $1,000 0 $1,00 803.6 $1,196. $214. PV Price 0 4 34 55 YTM(yield to i maturity) 8% 8% 8% 0% CurrentYield(CY)=nnualCouponCouponrate×ParValu) pric( P) A B C D Annual Coupon $80 $60 $100 $0 $1,00 803.6 $1,196. $214. PV Price 0 4 34 55 80 60 100 0 A= =8 B= =7.47 C= =8.36 D= =0 1000 803.64 1196.34 214.55 When the bond is selling at a discount the YTM < coupon rate (selling price < par value) When the bond is selling at a premium the YTM > coupon rate (selling price > par value) 1. Price risk or interest rate risk a. Rising interest, falling bond price b. Falling interest, rising bond price ( because people don’t want to pay a lot of interest ) 2. Reinvestment Risk a. Greater coupon rate means Greater the reinvestment risk b. Consider option C; if you buy a bond for at a premium at $1,196.34 it will be harder to sell that bond to someone else for the same price when the par value is $1000(what the bond is worth) Callable Bonds YTM Bond Valuation BONDYTC 2CallPV -962allable (-------->l P/Y )Call Price 1040 PV -When:MT 35 1000 N FV (10yrs*2 PMT 35 ) 20 Par $1,00 N 50 0 (25yrs*2 I or ytc 7.8Price $962 ) Matures (years) 25 7.33 I or ytm Coupon rate (semi-ann.) 7% $1,04 Callable @ 10 yrs 0 Current Yield = 7.28% Yield to Maturity 7.33% Yield to Call (YTC)= 7.83%


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Anthony Lee UC Santa Barbara

"I bought an awesome study guide, which helped me get an A in my Math 34B class this quarter!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.