Productivity at your daily life

Interest Rate Risk
As we saw in Chapter 1, interest rates go up and down over time, and an increase in interest rates leads to a decline in the value of outstanding bonds. This risk of a decline in bond values due to rising interest rates is called interest rate risk. To illustrate, suppose you bought some 10 percent MicroDrive bonds at a price of $1,000, and interest rates in the following year rose to 15 percent. As we saw earlier, the price of the bonds would fall to $713.78, so you would have a loss of $286.22 per bond.10 Interest rates can and do rise, and Read the rest of this entry »

Being addicted to alcohol and drugs is worst way of life. It may change your behaviors, ruin your future and destroy your family. Those things may happen because people with alcohol or drug addiction may do every possible thing to get their bad habit even crimes. You need to get out from that hell and get a sober life so that you may get your bright future back. Unfortunately, to release yourself from your addiction is more complicated than you think. It may spend the rest of your life if you do not know the best method to deal with your addiction. You need help from the expert who knows the best method for you. Read the rest of this entry »

Although some bonds pay interest annually, the vast majority actually pay interest semiannually. To evaluate semiannual payment bonds, we must modify the valuation model (Equation 4-1) as follows:
1. Divide the annual coupon interest payment by 2 to determine the dollars of interest paid each six months.
2. Multiply the years to maturity, N, by 2 to determine the number of semiannual periods.
3. Divide the nominal (quoted) interest rate, rd, by 2 to determine the periodic (semiannual) interest rate. Read the rest of this entry »

If you examine brokerage house reports on bonds, you will often see reference to a bond’s current yield. The current yield is the annual interest payment divided by the bond’s current price. For example, if MicroDrive’s bonds with a 10 percent coupon were currently selling at $985, the bond’s current yield would be 10.15 percent ($100/$985). Read the rest of this entry »

have the option of holding the bond until it matured. Therefore, the yield to maturity would not be earned. For example, if MicroDrive’s 10 percent coupon bonds were callable, and if interest rates fell from 10 percent to 5 percent, then the company could call in the 10 percent bonds, replace them with 5 percent bonds, and save $100  $50
$50 interest per bond per year. This would be beneficial to the company,
but not to its bondholders. Read the rest of this entry »

Importance of Bond Ratings Bond ratings are important both to firms and to investors. First, because a bond’s rating is an indicator of its default risk, the rating has a direct, measurable influence on the bond’s interest rate and the firm’s cost of debt. Second, most bonds are purchased by institutional investors rather than individuals, and many institutions are restricted to investment-grade securities. Thus, if a firm’s bonds
fall below BBB, it will have a difficult time selling new bonds because many potential purchasers will not be Read the rest of this entry »

Note that interest rate risk relates to the value of the bonds in a portfolio, while reinvestment rate risk relates to the income the portfolio produces. If you hold long-term bonds, you will face interest rate risk, that is, the value of your bonds will decline if interest rates rise, but you will not face much reinvestment rate risk, so your income will be stable. On the other hand, if you hold short-term bonds, you will not be exposed to much interest rate risk, so the value of your portfolio will be stable, but you will be exposed to reinvestment rate risk, and your income will fluctuate with changes in interest rates. Read the rest of this entry »

Interest Rate Risk

As we saw in Chapter 1, interest rates go up and down over time, and an increase in interest rates leads to a decline in the value of outstanding bonds. This risk of a decline in bond values due to rising interest rates is called interest rate risk. To illustrate, suppose you bought some 10 percent MicroDrive bonds at a price of $1,000, and interest rates in the following year rose to 15 percent. As we saw earlier, the price of the bonds would fall to $713.78, so you would have a loss of $286.22 per bond.10  Interest rates can and do rise, and Read the rest of this entry »

To have a debt in your life must be something terrifying as it would definitely prevent you from getting the chances in enjoying the cheerful life, wouldn’t it? Well, if such mess happens on you, there is nothing to be afraid of anyway. Why? Well, just like other problems in this world, this thing also has to be something solvable for you as well. And the only way you can take to accomplish such thing is by logging on to the billconsolidationcare.com website. Why this website? It is all because this website is allowing you to have yourself some meaningful way out to be opted. Read the rest of this entry »

If you examine the bond market table of The Wall Street Journal or a price sheet put out by a bond dealer, you will typically see information regarding each bond’s maturity date, price, and coupon interest rate. You will also see the bond’s reported yield. Unlike the coupon interest rate, which is fixed, the bond’s yield varies from day to day depending on current market conditions. Moreover, the yield can be calculated in three different ways, and three “answers” can be obtained. These different yields are described in the following sections. Read the rest of this entry »