4. Valulation Of Shares, Debentures & Bonds Flashcards
0
Q
What is a bond?
A
Long term debt securities
1
Q
What are notes?
A
Unsecured debt securities
2
Q
What are the three elements of valuation?
A
Future cash flows The interest rate or discount rate Present worth (present value)
3
Q
Why do companies of governments sell or issue bonds or notes?
A
It is an interest only loan, the borrower doesn’t pay back the principal in repayments. They then pay the coupon rate of the loan, this is coupon payments
4
Q
What is the difference between bonds, debentures and unsecured notes?
A
Governments and semi government organisations issue bonds
Large corporations can issue corporate bonds
Company debentures and unsecured notes are other debt securities
5
Q
What are coupon payments?
A
The stated interest payments made on a bond
