Types of bonds
Mortgage bond (secured)
Debenture (unsecured)
Subordinated debenture
Eurobond
Junk bonds
Coupon vs. yield
Coupon rate is stated on the bond
Yield is calculated annual interest payments/market price
Zero coupon bonds
Bond valuation
Data needed: cash flow information term to maturity investor’s required rate of return (which considers risk and market conditions)
Mortgage bond (secured)
Debenture (unsecured)
Subordinated debenture
Eurobond
Junk bonds
Coupon vs. yield
Coupon rate is stated on the bond
Yield is calculated annual interest payments/market price
Zero coupon bonds
Bond valuation
Data needed: cash flow information term to maturity investor’s required rate of return (which considers risk and market conditions)