Lecture Contemporary financial management (9th Edition): Chapter 6 - Moyer, McGuigan, Kretlow

Chapter 6 - Fixed-income securities: characteristics and valuation. This chapter focuses on the characteristics and valuation of fixed-income securities: long-term debt preferred stock | 6 Fixed-Income Securities: Characteristics and Valuation Introduction This chapter focuses on the characteristics and valuation of fixed-income securities. Long-term debt Preferred stock Classification of Long-Term (L-T) Debt When a company borrows money in the capital markets, it issues long-term debt securities to investors. These bonds are usually sold in denominations of $1,000 and constitute a promise by the issuing company to repay a certain amount of money (the $1,000 principal) on a particular date (the maturity date) and to pay a specific amount of interest at fixed intervals (usually twice a year). Classification of Long-Term (L-T) Debt Most debt has a par value of $1,000, and debt prices are often expressed as a percentage of that value. For example, a market price listing of “87” indicates that a $1,000 par value bond may be purchased for $870. Classification of Long-Term (L-T) Debt Mortgage bonds are secured by specific physical assets of the issuing company. Debentures or debenture bonds are unsecured by specific physical assets of the issuing company. Classification of Long-Term (L-T) Debt At the present time, utility companies are the largest users of mortgage bonds. In recent years, the use of mortgage bonds relative to other forms of long-term debt has declined, whereas the use of debentures has increased. Classification of Long-Term (L-T) Debt Because debentures are unsecured, their quality depends on the general creditworthiness of the issuing company. As a result, they are usually issued by large, financially strong firms. Classification of Long-Term (L-T) Debt The yield differential between the mortgage bond and debenture alternatives is another example of the risk-return trade-off that occurs throughout finance. Classification of Long-Term (L-T) Debt For example, suppose Midstates Oil company could issue either mortgage bonds or debentures. If the mortgage bonds could be sold with a 10 percent interest rate, the debentures would have to be . | 6 Fixed-Income Securities: Characteristics and Valuation Introduction This chapter focuses on the characteristics and valuation of fixed-income securities. Long-term debt Preferred stock Classification of Long-Term (L-T) Debt When a company borrows money in the capital markets, it issues long-term debt securities to investors. These bonds are usually sold in denominations of $1,000 and constitute a promise by the issuing company to repay a certain amount of money (the $1,000 principal) on a particular date (the maturity date) and to pay a specific amount of interest at fixed intervals (usually twice a year). Classification of Long-Term (L-T) Debt Most debt has a par value of $1,000, and debt prices are often expressed as a percentage of that value. For example, a market price listing of “87” indicates that a $1,000 par value bond may be purchased for $870. Classification of Long-Term (L-T) Debt Mortgage bonds are secured by specific physical assets of the issuing company. Debentures .

Không thể tạo bản xem trước, hãy bấm tải xuống
TÀI LIỆU MỚI ĐĂNG
Đã phát hiện trình chặn quảng cáo AdBlock
Trang web này phụ thuộc vào doanh thu từ số lần hiển thị quảng cáo để tồn tại. Vui lòng tắt trình chặn quảng cáo của bạn hoặc tạm dừng tính năng chặn quảng cáo cho trang web này.