TAILIEUCHUNG - Financial Management - Chapter 7

Bonds pay fixed coupon (interest) payments at fixed intervals (usually every 6 months) and pay the par value at maturity. Debentures - unsecured bonds. Subordinated debentures - unsecured “junior” debt. Mortgage bonds - secured bonds. Zeros - bonds that pay only par value at maturity; no coupons. Junk bonds - speculative or below-investment grade bonds; rated BB and below. High-yield bonds. Eurobonds - bonds denominated in one currency and sold in another country. (Borrowing overseas). example - suppose Disney decides to sell $1,000 bonds in France. These are . denominated bonds trading in a foreign country. Why do this?. | Ch. 7: Valuation and Characteristics of 2002, Prentice Hall, Inc. Characteristics of Bonds Bonds pay fixed coupon (interest) payments at fixed intervals (usually every 6 months) and pay the par value at maturity. Characteristics of Bonds Bonds pay fixed coupon (interest) payments at fixed intervals (usually every 6 months) and pay the par value at maturity. 0 1 2 . . . n $I $I $I $I $I $I+$M example: ATT 6 1/2 29 par value = $1000 coupon = of par value per year. = $65 per year ($ every 6 months). maturity = 28 years (matures in 2029). issued by AT&T. example: ATT 6 1/2 29 par value = $1000 coupon = of par value per year. = $65 per year ($ every 6 months). maturity = 28 years (matures in 2029). issued by AT&T. 0 1 2 28 $ $ $ $ $ $$1000 Types of Bonds Debentures - unsecured bonds. Subordinated debentures - unsecured “junior” debt. Mortgage bonds - secured bonds. Zeros - bonds that pay only par value at maturity; no coupons. Junk bonds - speculative or below-investment grade bonds; rated BB and below. High-yield bonds. Types of Bonds Eurobonds - bonds denominated in one currency and sold in another country. (Borrowing overseas). example - suppose Disney decides to sell $1,000 bonds in France. These are . denominated bonds trading in a foreign country. Why do this? Types of Bonds Eurobonds - bonds denominated in one currency and sold in another country. (Borrowing overseas). example - suppose Disney decides to sell $1,000 bonds in France. These are . denominated bonds trading in a foreign country. Why do this? If borrowing rates are lower in France, Types of Bonds Eurobonds - bonds denominated in one currency and sold in another country. (Borrowing overseas). example - suppose Disney decides to sell $1,000 bonds in France. These are . denominated bonds trading in a foreign country. Why do this? If borrowing rates are lower in France, To avoid SEC regulations. The Bond Indenture The bond contract between .

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