About This Chapter
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
|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.|
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.
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.
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.
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.
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.
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.
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.
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Other chapters within the Finance 101: Principles of Finance course
- Introduction to Corporate Finance
- Financial Statements, Taxes & Cash Flow
- Financial Statement Basics
- Long-Term Financial Planning & Growth
- Introduction to Valuation Methods
- Discounted Cash Flow Valuation
- Stock Valuation
- Net Present Value & Investment Basics
- Capital Investment Decisions
- Accounting Risk & Return
- Return, Risk, & the Security Market Line
- Options & Corporate Finance
- Cost of Capital
- Financial Leverage & Capital Structure
- Dividends & Dividend Policy
- Short-Term Financing & Planning
- Cash & Liquidity Management
- Credit & Inventory Management
- International Corporate Finance
- Studying for Finance 101