Financial Accounting

Chapter 7 Bonds and Their Valuation LEARNING OBJECTIVES After reading this chapter, students should be able to: come the four main classifications of bring abouts and differentiate among them. Identify the key characteristics coarse to all bonds. Calculate the foster of a bond with yearbook or semiannual amour payments. Explain why the marketplace value of an outstanding fixed-rate bond will fall when divert rates rise on new bonds of equal risk, or vice versa. Calculate the current final payment, the yield to maturity, and/or the yield to call on a bond. Differentiate between involution rate risk, reinvestment rate risk, and default risk. List major types of somatic bonds and distinguish among them. Explain the importance of bond ratings and list approximately of the criteria used to rate bonds. Differentiate among the following terms: Insolvent, liquidation, and reorganization. enter and understand the information provided on the bond market varlet of your newspaper. LECTURE SUGGESTIONS This chapter serves two purposes. First, it provides important and useful information on bonds per se.

Second, it provides a good example of the use of time value concepts, so it reinforces the topics covered in Chapter 6. We begin our lecture with a discussion of the different types of bonds and their characteristics. Then we move on to how bond values are established, how yields are determined, the effects of changing interest rates on bond prices, and the riskiness inherent in different types of bonds. The details of what we cover, and the way we cover it, can be attendn by scanning Blueprints, Chapter 7. For other suggestions about the lecture, please see the Lecture Suggestions in Chapter 2, where we describe how we conduct our classes. DAYS ON CHAPTER: 4 OF 58 DAYS (50-minute periods) ANSWERS TO END-OF-CHAPTER QUESTIONS 7-1Yes, the statement is true. 7-2False. Short-term... If you want to get a full essay, order it on our website: Ordercustompaper.com

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