Par or Face Value -
The amount of money that is paid to the bondholders at maturity. For most bonds this amount is $1,000. It also generally represents the amount of money borrowed by the bond issuer.
Coupon Rate -
The coupon rate, which is generally fixed, determines the periodic coupon or interest payments. It is expressed as a percentage of the bond's face value. It also represents the interest cost of the bond to the issuer.
The structure of the paper is as follows. Section 2 discusses the literature on both measuring
competition and the bank interest rate pass-through. Section 3 describes the Boone indicator of
competition and Section 4 the employed interest rate pass-through model of the error-correction type
and the applied panel unit root and cointegration tests. Section 5 presents the various data sets used.
The results on the various tests and estimates of the spread model and the error correction model
equations are shown in Section 6. Finally, Section 7 summarises and concludes....
Chapter 10 - Reporting and interpreting bonds. After studying this chapter, you should be able to: Describe the characteristics of bonds, report bonds payable and interest expense for bonds sold at par and analyze the times interest earned ratio, report bonds payable and interest expense for bonds sold at a discount, report bonds payable and interest expense for bonds sold at a premium, analyze the debt-to-equity ratio, report the early retirement of bonds.
Upon completion of this chapter you should understand: Applying return on investment analysis to decision problems, management goals, efficiency and productivity; time value of money and the application application of single‐payment interest calculations to single-and multiple-payment problems; time value of money or cash flow diagrams; application of compound, effective, nominal and continuous interest calculations; inflation and the time value of money.
Chapter 10 - Reporting and interpreting bonds. This chapter describe the characteristics of bonds, report bonds payable and interest expense for bonds sold at par and analyze the times interest earned ratio, report bonds payable and interest expense for bonds sold at a discount, report bonds payable and interest expense for bonds sold at a premium, analyze the debt-to-equity ratio, report the early retirement of bonds.
After studying this chapter you will be able to: Describe what interest rates are and differentiate nominal from real interest rates, describe the use of present value calculations in determining the value of a payment stream, apply the tool of present value when thinking about economic decisions where the costs and benefits of the decisions happen at different times.
Demand depends on two factors demand transaction from dn and households, the interest rate impact on demand. and the demand for assets. money supply based on: + annual growth rate of kt + the cost of goods index (inflation) + budget deficit + deficit of the balance of international payment + credit channel (discount) budget + channels (government loans and loan) + central bank released the money to buy foreign currency reserves.
Bonds pay fixed coupon (interest) payments at fixed intervals (usually every 6 months) and pay the par value at maturity.
Debentures - unsecured bonds.
Subordinated debentures - unsecured “junior” debt.
Mortgage bonds - secured bonds.
Zeros - bonds that pay only par value at maturity; no coupons.
Junk bonds - speculative or below-investment grade bonds; rated BB and below. High-yield bonds.
Eurobonds - bonds denominated in one currency and sold in another country. (Borrowing overseas).
example - suppose Disney decides to sell $1,000 bonds in France. These are U.S.
Accounting is the most employable, sought-after major for 2009, according to entrylevel job site CollegeGrad.com. One reason for this interest is found in the statement by former Secretary of the Treasury and Economic Advisor to the President, Lawrence Summers. He noted that the single-most important innovation shaping our capital markets was the idea of generally accepted accounting principles (GAAP). We agree with Mr. Summers. Relevant and reliable financial information is a necessity for viable capital markets.
A very important campaign is waged every working day in numerous businesses across England and Wales. It happens as directors, partners, proprietors, managers, credit controllers and their staff try to collect the money that is owed to them or their organisations. They almost always succeed in the end, but all too often the end is much too long coming. The culture of slow payment continues to be a problem and for some it can be a life or death problem, at least in the business sense.
Liquidity Monitoring Ratios
a) The Debt Service Ratio is the proportion of exports of goods and non
factor services that is absorbed for debt service payments, i.e., interest,
principal and other payments. The basic ratio refers only to long and
medium-term debt which covers all loans with an original maturity of
one year and above.
b) The Interest Service Ratio is the ratio of interest payments to exports
of goods and non-factor services.
The cost method presents no special complications. Interest-bearing debt securities that are
purchased between interest dates are recorded at cost, which is market value on the date of
acquisition. Accrued interest since the last interest payment date is recorded as interest
receivable.Accrued interest is added to the cash paid because, at each interest date, the inter-
est is paid to whomever holds the securities regardless of when they actually purchased
Interest income is recognized on the accrual basis.
Dividend income and distributions from investment
trust units are recognized on the ex-dividend and
ex-distribution date, respectively.
Interest on inflation-indexed bonds will be paid
based on the principal value, which is adjusted for
inflation. The inflation adjustment of the principal
value is recognized as part of interest income in the
Statement of Operations.
Why do prices and interest rates move in opposite directions?
Assume that a person invests $1,000 in a 20-year U.S.Treasury
bond with a 5.5% yield (interest payments totaling $55 a year).
If interest rates immediately rise to 6.5%, another person could buy
a $1,000 Treasury bond and get $65 a year in interest, so no one
would be willing to pay $1,000 for the older bond paying 5.5%,
and so it would decline in price (in this case, to $889).On the
other hand, if interest rates fell and new Treasury bonds (with
similar maturities) were offered with a 4.
Chapter 4 "Balance of payment" Lecture Multinational financial management introduce to you the content: Explain what the balance of payments BOP is study how to analyze BOP, discuss the relationship between the BOP and the gross domestic product, the exchange rate, the interest rate, and the inflation rate,...
Demand for organically produced food products is increasing rapidly in North
America, driven by a perception that organic agriculture results in fewer negative
environmental impacts and yields greater benefits for human health than conventional
systems. Despite the increasing interest in organic grain production on the Canadian
Prairies, a number of challenges remain to be addressed to ensure its long-term
sustainability. In this review, we summarize Western Canadian research into organic crop
production and evaluate its agronomic, environmental, and economic sustainability. ...
a spread over U.S. Treasury bonds of a similar maturity.
Typically, payments made by one counterparty are based
on a floating rate of interest, such as the London Inter
Bank Offered Rate (LIBOR) or the Securities Industry and
Financial Markets Association (SIFMA) Municipal Swap
, while payments made by the other counterparty
are based on a fixed rate of interest, normally expressed as
The maturity, or “tenor,” of a fixed-to-floating interest rate
swap is usually between one and fifteen years.
Bonds are securities that establish a creditor relationship between the purchaser (creditor) and the
issuer (debtor). The issuer receives a certain amount of money in return for the bond, and is
obligated to repay the principal at the end of the lifetime of the bond (maturity). Typically, bonds
also require coupon or interest payments. Since all these payments are determined as part of the
contracts, bonds are also called fixed income securities.
A straight bond is one where the purchaser pays a fixed amount of money to buy the bond.
This paper presents a stock flow model of two economies (together comprising the whole world)
which trade goods and financial assets with one another. The accounting framework, though
comprehensive in its own terms, is very much simplified (it has interest rates without interest
payments and exchange rate changes without changes in relative prices) so as to reach the main
conclusions as simply and easily as possible.
Since the swap counterparty is typically the bank also acting as ETF provider, investors may
be exposed if the bank defaults
. Therefore, problems at those banks that are most active in
swap-based ETFs may constitute a powerful source of contagion and systemic risk.
In addition, the incentives behind the creation of synthetic ETFs may not be aligned along the
ETF chain, especially as conflicts of interest can arise from the dual role of some banks as
ETF provider and derivative counterparty7