《金融学教学》bodie2echapter08PPT课件.ppt

Chapter 8:  Valuation of Known Cash Flows: Bonds
Objective
Valuation of fixed e securities
Explain why bond prices change
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Chapter 8 Contents
Using Present Value Formulas to Value Known Flows
The Basic Building Blocks: Pure Discount Bonds
Coupon Bonds, Current Yield, and Yield-to-Maturity
Reading Bond Listings
Why Yields for the same Maturity Differ
The Behavior of Bond Prices Over Time
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Using Present Value Formulas to Value Known Flows
You have been offered the opportunity to purchase a mortgage. It was originally part of a creative financing package where the original owner financed the buyer
The remaining life of the mortgage is 60 months, with payment of $400. Your required rate of return is % / month
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Calculation
Using the present value of an annuity formula discussed in chapter 4, you will pay no more than
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Financial Calculator
Alternatively, using your financial calculator (remember to set the correct defaults) you obtain
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Change in Required Rate
If your required rate of return increased to % / month
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Bond Prices Rise as the Interest Rates Fall
If i goes up, 1+i goes up, 1/(1+i) goes down for i > -1, (1/(1+i))j goes down for i > 0. So if the payments are positive, then the sum must also go down
Similarly, i down -> PV up
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Bond Prices Rise as the Interest Rates Fall
Basic principle in evaluating known flows
A change in market interest rates causes a change in the opposite direction in the market values of all existi