3. Usually issuers agree to pay fixed interest on every six months and principal at the date of maturity
4. MONEY MARKET when maturity less than 1 year, NOTES when above 1year but less than 10 years, BONDS when maturities excess 10 yearsHPR= holding period return HPY= holding period yield
5. TAX effect i= coupon rate T= tax rate If i is 5% and tax rate is 20% then equivalent taxable yield (ETY) ?
6. 8% coupon bond, matures in 20 years with par value of $1000. YTM is 10%. What is coupon? YTM? Value of Bond?
8. If yield <coupon rate then , bond will be priced at a premium If yield> coupon rate then, bond will be priced at a discount Price-yield relationship is convex
9. Yield is determining factor Nominal yield = a bond with 8% coupon has 8% nominal yield Current yield i is expected or promised yield. Pm is current market price and promised price.