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Relationship btwn an investor's required rate of return and value pf security
risk is pre-stage for return...
according to the come rates the returns we get if we purchase higher rated coupon bonds we get higher returns
Zero coupon bonds do not pay interest and are therefore sold at a steep discount to face value depending on the maturity date of the bond. Due to the time value of money, the discount on a 30 year zero coupon bond will be much greater than on a 10 year zero coupon bond. At maturity bondholders will receive the full face value of the bond which provides bondholders a return. For example, a 30 year zero coupon bond with a face value of $1,000 and sold for $500 would return a $500 profit after 30 years. Holders of zero coupon bonds can sell the bonds at any time before maturity. If an investor bought zero coupon bonds prior to a steep drop in interest rates, the value of the zero coupon bonds would increase and could be sold at a profit.
Yes. At maturity you get the final coupon payment in addition to the return of principal.
required rate of return is the 'interest' that investors expect from an investment project. coupon rate is the interest that investors receive periodically as a reward from investing in a bond
relationship between WACC and required rate of return.
The difference between the coupon rate and the required return of a bond is dependent upon the type of bond. Junk bonds will have the biggest difference between its return and the coupon rate.
Difference enters bond's coupon interest rate the current yield y bondholder's required rate of return?
Relationship btwn an investor's required rate of return and value pf security
risk is pre-stage for return...
122.22
When it comes to investing, one general relationship between risk and reward is that taking more risk is associated with a greater return. However, in many cases there is no relationship between the two. For example, even though stocks tend to have a higher return than bonds, taking that risk does not guarantee a better return.
if there is no growth in a firm the return of equity is equal to the dividend yield
par value
The nationality of a person is a legal relationship between the person and a country. The person falls under certain regulations and is required to complete certain duties and receives rights, protection and benefits in return.
He gives you back the price you paid for and keeps the coupon because you can't use it anymore.