**TI82** TxtView file generated by CalcText - Kouri1 "chap6" ˙chap6Bonds cash flows face value: compute the interest payments coupon rate:determines the amount of each coupon payment CPN= coupon rate x face value / N° of coupon payment per year zero coupon bond : no coupon payments; sells at a discount (price sup ŕ face value) Tbills: us gov zero coupon maturity sup a 1 annee YTM: discount rate ( tx d'actu) sets PV of promised bond payments equal to current market pice of the bond Price zero coupon bond = P= FV/ (1+YTMn)^n YTMn= (FV/P)^1/n -1 rn = YTMn si risk free interest rate with maturity n 2) Discount = less than face value Par = equal Premium: bond selling at prem if Price sup face value When the bond price is we say the bond trades this occurs when Sup face value above at premium coupon rate sup YTM = Face value at par = YTM Inf face value below par at discount INF YTM P = CPN x 1/y (1 - 1/(1+y)^N + FV/(1+y)^N IRR = (FV/P)^1/N -1 P= price du bond acheté au début YTMn = (FV/P)^1/N before coupon paid= rajouter 10% selon le taux de l'exo After coupon paid = sans les 10% résultat = before c'est 176,86*1,05 (YTM) Inverse relationship between interest rates and bond prices interest rate aug ; bond dim interest rate dim, bond price aug dépend de la duration 3) Corporate bonds credit risk = risk ou défault no default = price of T-BILL P=FV/ (1+YTM) Certain default= caract par bond issuer paid by issues at % rate YTM = FV/P -1 YTM sup a expected return Speculative bonds = junk bonds or high yield bonds Default spread = credit spread Diffrence bet yield on corpo bond et Treasury yields˙C-