Fixed Income Flashcards
1
Q
Calculate current yield
A
Actual coupon PMT
/
Price
2
Q
Calculate accrued interest
A
Coupon x Days / year
3
Q
What is higher, local currency debt rating or foreign currency debt rating
A
local
4
Q
What are the 4 C’s, and how can you distinguish between them
A
Capacity
-Ability to repay debt
- Industry and company fundamentals
Collateral,
-Value of collateral
Character
Character refers to management’s integrity and its commitment to repay the loan
Covenants
Covenants are the terms and conditions the borrowers and lenders agree to as part of a bond issue.
Affirmative / Negative
5
Q
When can a YTM be interpreted as a spot rate?
A
When there is only one payment left. This would be impossible for bonds issued at a premium or par with more than one year remaining.
