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52 Cards in this Set
- Front
- Back
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fv
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future value
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principal
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orgininal amount invested
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pv
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value today
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$100 today is (blank) valuable than in the future
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more
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when comparing move things into?
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pv
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annuity as what time limit
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none, goes on forever
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other names for exchange rate
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1.discount rate
2.cost of capital 3.required return on investment |
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double money at 6%
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72/6 = 12 years
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market value
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present value
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annuity
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finite series of equal dollar payments
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ordinary annuity annuity due
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o - payment occurs at end of the period
ad - paymnet occurs at beginning of the period |
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perpetuity
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infinite series of equal payments
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VRI
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value * rate = income
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discounted cash flow
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calculating the present value of a future cash flow to determine its worth today
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effective annual rate(ear)
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interest rate expressed as if it were compounded once per year
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annual percentage rate(apr)
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interest rate charged per period multiplied by the number of periods per year
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coupon
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stated interest payment on the bond
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face(par) value
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principal amount of a bond that is repaid at the end of the term.
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coupon rate
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rate corp. promises to pay annually...annual coupon divided by the bond
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maturity date
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when par value is payed back to investors.
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yield to maturity
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rate required in the market on a bond
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current yield
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bonds annual coupon divided by its price
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indenture
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written agreement b/t corp and the lender detailing the terms of the debt issue
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registered form
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registered directly to a persons name
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bearer form
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issued without the record of someones name
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bond value
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pv coupons + pv of par
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interest increase
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pv decrease
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ytm=coupon rate
ytm>coupon ytm<cr |
pv=bond price
par value>bond price par value<bond price |
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price risk
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changes in price due to changes in interest rate
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reinvestment rate risk
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uncertainty concerning rates at which cash flows can be reinvested
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short term has(blank) reinvestment rate than long term
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more
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semi annual coupons
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double n; double i/y; half payment
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debt
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-no ownership
-creditors have no votes -interest tax deduct -recourse if missed payments -bankruptcy |
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equity
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-ownership
-vote -NOT tax deduct -no legal recourse -no bankruptcy |
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sinking funds provision
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account managed by bond trustee for the purpose of repaying the bonds. company makes annual payments to the trustee who retires portion of debt
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call provisions
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corp. can buy bond prior to maturity
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call premium
deffered call |
amount price exceeds par value
-prohibit redeeming prior to date |
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protective covenant
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certain actions to protect the bond holder. negative and positive covenants
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debenture
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unsecured debt no specific pledge of property is made
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note
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unsecured debt with maturity less than 10 years
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secured debt
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pledge of some assets
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coupon rate
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depends on orgs. credit rating
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security
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collateral and mortgages
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listed in bond debenture
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1.terms
2.amount of bonds 3.descip. of security 4. repay 5. call 6.protec cov |
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seniority
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preference in position over the other lenders and debts
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subordinated debenture
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type of seniority. where creditors are payed off before subordinated lenders
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t-bills
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pure discount. maturity less the 1 year
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t-notes
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coupon with orginal maturity b/t 1-10 yers
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t-bonds
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coupn debt with orginial maturity
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zero coupon bonds
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bond that makes no annual payment and is price at discount
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floating rate bonds
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coupon payments are adjustable
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income bond
convertable bond |
i-coupon payments depend on org. income
c-swapped for stock |
