FNCE 3010 Midterm 1

Coupon Rate= YTM, Price= Par Value

• Discount Bond

• Par Value

• Premium Bond

Coupon Rate> YTM, Price>Par Value

• Discount Bond

• Par Value

• Premium Bond

Coupon Rate<YTM, Price<Par Value

• Discount Bond

• Par Value

• Premium Bond

more senior

• less risk=lower return

• more risk=higher return

less senior

• less risk=lower return

• more risk=higher return

more security

• less risk=lower return

• more risk=higher return

less security

• less risk=lower return

• more risk=higher return

callable

• less risk=lower return

• more risk=higher return

noncallable

• less risk=lower return

• more risk=higher return

not sensitive to interest rate changes

• longer maturity bonds

• shorter maturity bonds