Bond Valuation Homework Help
Get Bond Valuation Homework Help with Proper Explanations
Accounts have always been a confusing subjects for those whose concepts and base is not clear. It has various chapters in it which is actually very useful in day to day work and in maintaining the books of accounts of your enterprise. Bond valuation is one such major chapter which helps in determining the fair value of a bond. If you are facing difficulty in solving the problems of this chapter then, refer to bond valuation homework help.
Brief Introduction to the Topic
As said earlier the topic of bond valuation helps in defining the value of bonds. It is obviously not as simple as it seems to be. When an appropriate discount rate is used in discounting the bonds expected cash flow to the present, the actual value of a bond is obtained. There are various approach and trial-error factors which influence its value. Some of the different approach to solve one particular problem may include relative price approach, present value approach, arbitrage-free pricing approach, stochastic calculus approach etc. there is much more complications than what it has been mentioned here. It is clearly evident that a student needs an external help to clear out these confusion for which one needs bond valuation assignment help.
The investor would be using bond valuation to understand the maturity value and that would help the investor to decide to invest or not. The present value would be calculated along with the cash flow. Bonds are an important part of capital market.
Bonds are supposed to give a steady income to the bondholder and would help the investor to get steady returns. For example assume that bond is paying 8% interest rate and the face value of the bond is $1000 having a maturity period of 5 years. The bond would pay $80 every year till its maturity would repay principal of $1000 at the end of fifth year the total cash that and person gets back in the fifth year is $1080 and person would get $80 from first year to fourth year.
The regular bond has many characteristics
- There would be a coupon rate that would be present in the bond. This would be paid to the investor semi-annually. This would help the investor tide over the crisis. This payment would be continued till maturity of bond takes place.
- Bonds have a maturity date and based on the maturity date it can be termed as short term or long term. The full face value of the bond is given back to the investor at the time of maturity.
- The investor can buy the bond below par at par or above par based on the interest that the bond offers. The valuation type would be covered in detail in bond valuation assignment help.
The understanding of terms and types of bonds
- Face value is the principal amount that an investor would get back when on maturity.
- Coupon is the rate of interest that a bond would have.
- There would be a rating for bonds that would be done by agencies. The higher the rating would mean that interest would be less.
- Some bonds come with no complications, and that is known as plain vanilla bond, and the other name is a straight bond. These bonds can be redeemed at maturity.
- Some bonds come with a discount, and that means the face value that is offered to the investor would be less and would get yield after maturity.
- There are treasury bonds that are issued by US federal government. These bonds have a purpose of overcoming deficits and these bonds are regulated by government taxing authority. The yields are low but are protected from tax and surety of getting money is a factor.
- Bond valuation assignment help would cover other US government bonds that are termed as agency bonds. The agency bonds credit interest rates are considered higher and the rating of risk is minimal also.
- Companies with strong financial balance sheet can come out with corporate bonds, and Standard and Poor and Moody credit agencies usually give triple B rating for these bonds. The yields are considered higher when compared to treasury and agency bond.
- Companies having weak financial balance sheet would be coming out with bonds, and these bonds are known as high yield bonds. The stock prices are tracked clearly in these bonds when compared with other investment bonds.
- There are foreign bonds that usually come with dollar denomination, but in a majority of cases, these bonds would be keeping their currency. Bond valuation assignment help would also help students follow the trading of currency if needed.
- There are municipal bonds that are issued in US and interest is tax-free but limited to certain conditions.
- There are perpetual bonds that have to be paid till the company exists. Bond valuation assignment help would help student understand the various nuances in corporate set up. The perpetual bonds do have a value of more than 100 years also.
- There are equity shares convertible bonds. These equity shares cannot be exchanged easily, and that would need the second company to have a decent stock in the other holding company.
- Some bonds have the right to be called back by the issuer, and these bonds are known as callable bonds. There would be a coupon rate that would be normally higher than the other bonds.
- A bond that is issued in US dollars but the issuer is residing outside of USA is known as Yankee bonds and these are covered in detail in Bond valuation homework help.
Features of Homework Help in bond valuation assignment help
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