Chapter 6 Bonds and Bond Valuation

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Learning Objectives

  1. LO1 Understand basic bond terminology and apply the time value of money equation in pricing bonds.

  2. LO2 Understand the difference between annual and semiannual bonds and note the key features of zero-coupon bonds.

  3. LO3 Explain the relationship between the coupon rate and the yield to maturity.

  4. LO4 Delineate bond ratings and why ratings affect bond prices.

  5. LO5 Appreciate bond history and understand the rights and obligations of buyers and sellers of bonds.

  6. LO6 Price government bonds, notes, and bills.

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