Ch 7: Interest Rates & Bond Valuation

About This Chapter

This chapter covers the details of bonds and their use as a financing option. The lessons are designed with an engaging video format and feature quizzes to help you retain the information presented.

Interest Rates & Bond Valuation - Chapter Summary and Learning Objectives

Explore the world of financing through bond issuance. Our instructors take you through how bonds work bond markets, and how to determine yield. Review the material as many times as you like by reviewing the videos, searching by topic with the interactive video timeline feature, or by reading the written transcript. This chapter will teach you about:

  • Bond financing
  • Debt and indenture agreements
  • Bond ratings and markets
  • Interest rates and price changes
  • Bond yields

Video Objective
The Advantages of Bond Financing Discuss the features of bonds including prices, interest rate risk, and yields.
Long-Term Debt & the Indenture Agreement Examine the nature of long-term debt and the indenture agreement between bond issuers and holders.
Moody's vs. Standard & Poor's Bond Ratings Study the different bond ratings and learn about junk bonds.
Government, Zero-Coupon & Floating-Rate Bonds Discover different bond types including government, zero coupon, and floating-rate.
Bond Markets: Analysis & Strategies Look at the way bonds are bought and sold and how prices are reported.
Real vs. Nominal Interest Rates and Changes in Prices See how the interest rate of a bond can be changed by inflation.
Determinants of Bond Yields Learn what determines the yield of a bond and the yield curve.

7 Lessons in Chapter 7: Interest Rates & Bond Valuation
Test your knowledge with a 30-question chapter practice test
The Advantages of Bond Financing

1. The Advantages of Bond Financing

This lesson introduces you to the basics of bond financing, important vocabulary related to bond financing, and the financial advantages to the bond issuer. You will learn why bond issuances are a great way for companies to fund large projects.

Long-Term Debt & the Indenture Agreement

2. Long-Term Debt & the Indenture Agreement

Bonds present an option for investing in long-term debt. Let's take a look at bonds and the indenture agreement that states key details specific to it, such as seniority, repayment, call provision, and protective covenants.

Moody's vs. Standard & Poor's Bond Ratings

3. Moody's vs. Standard & Poor's Bond Ratings

Moody's and Standard & Poor's are bond rating organizations that evaluate the credit worthiness of individual corporate and government bonds. This lesson will familiarize you with the basics of their bond rating systems.

Government, Zero-Coupon & Floating-Rate Bonds

4. Government, Zero-Coupon & Floating-Rate Bonds

Bonds can be described by either who issued the bond or how the payments are structured. Let's look at a couple of examples of these different bond types.

Bond Markets: Analysis & Strategies

5. Bond Markets: Analysis & Strategies

Bonds may not be the most exciting investment opportunity, but they serve a valuable role in providing stability for an investment portfolio. Let's take a look at what investors need to know about bond purchases and strategy.

Real vs. Nominal Interest Rates and Changes in Prices

6. Real vs. Nominal Interest Rates and Changes in Prices

This lesson explains the important difference between nominal and real interest rates and provides examples of how to use the Fisher equation to adjust nominal rates for inflation.

Determinants of Bond Yields

7. Determinants of Bond Yields

While bonds are sold with a stated interest rate, there is more to the return than just the coupon rate. Let's look at what bond yields are along with what causes the yield to change and how a yield curve aids in bond investment evaluation.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
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Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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