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Essay Available:
Pages:
1 page/β‰ˆ275 words
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1 Source
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Coursework
Language:
English (U.S.)
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MS Word
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Total cost:
$ 6.32
Topic:

Valuation of Securities

Coursework Instructions:

Describe the impact of the coupon rate and yield to maturity (YTM) on bond par value and market value. If you were the CFO of a company and the Federal Reserve Bank decided to increase the interest rate by 1% beginning next quarter, what steps would you take to raise capital from the financial markets? Reference and cite needed.

Coursework Sample Content Preview:

Valuation of Securities
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Valuation of Securities
The coupon rate is fixed-income security's nominal yield or interest payment, such as bonds. The yield to maturity (YTM) is the gain or rate of return an investor anticipates earning on a bond, assuming they hold it to maturity. This includes all interest and coupon payments and any premium or discount adjustments. If the coupon rate (interest payment) is high, the bond's price rises, and so is the yield and vice versa. The YTM also represents the interest rate reinvested from the bond, and information on the maturity value, coupon payments, and the bond price are useful in valuing bonds. If the coupon rate is lower than the discount rate when the bond is purchased the YTM would be higher than the coupon rate and vice versa.
YTM = (C + (F - P) / n) / ((F + P) / 2)
Where
YTM→ yield to maturity
C → coupon paym...
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