fiance ch 3 Flashcards
1
Q
what is the face value of a bond
A
what you receive at maturity
2
Q
what is the coupon rate
A
it is the rate of interest as a percentage of face value eg: 1000 that pays 50 dollars has a coupon rate of 5%
3
Q
what is the yield to maturity (ytm)
A
its the itnerest rate that investors demand from the bond (usually isnt the coupon rate)
4
Q
how does the market price bonds
A
based on risk
5
Q
what is the realation with risk and YTM
A
higher the risk the higher the ytm
6
Q
what is the relation with bond prices and interest
A
they are inversly related
7
Q
A
