The document provides an overview of capital markets and securities analysis. It discusses the key participants in securities markets like regulators, stock exchanges, brokers, and depositors. It also outlines the different components of capital markets like equity markets, debt markets, and derivatives markets. The document then examines the primary and secondary markets, describing how new securities are issued in the primary market and then traded in the secondary market. It also discusses various valuation techniques for equities like balance sheet methods, discounted cash flow models, and relative valuation approaches. Overall, the document serves as an introduction to capital markets and securities analysis.
Presents what is investment, why invest, and where to invest?. Also, describes various investment schemes like mutual fund, stock, etc. along with their pros and cons.
Presents what is investment, why invest, and where to invest?. Also, describes various investment schemes like mutual fund, stock, etc. along with their pros and cons.
Capital Market: Components & Functions of Capital Markets, Primary & Secondary Market Operations, Capital
Market Instruments - Preference Shares, Equity Shares, Non-voting Shares, Convertible Cumulative Debentures (CCD),
Fixed Deposits, Debentures and Bonds, Global Depository receipts, American Depository receipts, Global Debt
Instruments, Role of SEBI in Capital Market.
All related information about capital market instruments such as debt instruments, equity instruments, insurance instruments, hybrid instruments, swaps etc.
Capital Market: Components & Functions of Capital Markets, Primary & Secondary Market Operations, Capital
Market Instruments - Preference Shares, Equity Shares, Non-voting Shares, Convertible Cumulative Debentures (CCD),
Fixed Deposits, Debentures and Bonds, Global Depository receipts, American Depository receipts, Global Debt
Instruments, Role of SEBI in Capital Market.
All related information about capital market instruments such as debt instruments, equity instruments, insurance instruments, hybrid instruments, swaps etc.
Panel discussion - Property v Luxury assets - what should and what will india...India inc
This Presentation is from Panel discussion on Property v Luxury assets - what should and what will indians invest in? session at the Global Wealth Management Conclave 2014 organised by India Inc - http://www.indiaincorporated.com- on April 7, 2014
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
3. Capital Market – An Overview
Participants In Securities Market
Regulators – Agencies having direct or indirect
influence over the securities market.
• Company Law Board
• Reserve Bank of India
• Securities & Exchange Board of India
• Department of Economic Affairs
• Department of Company Affairs
10/16/2012
4. Capital Market – An Overview
Participants In Securities Market
Stock Exchanges – A place where old
securities are bought & sold.
Listed Securities – Securities registered with
stock exchanges for trading.
Depositories - An institution where physical
certificates are dematerialised and ownership
is transferred by Electronic Book Entries.
10/16/2012
5. Capital Market – An Overview
Participants In Securities Market
Brokers – Registered members of stock
exchanges through whom investors transact.
E. g., Sharekhan, Indiabulls.
Foreign Institutional Investors – Institutions
from abroad registered with SEBI to invest in
Indian capital market.
10/16/2012
6. Capital Market – An Overview
Participants In Securities Market
Registrars – Agencies responsible to handle
investor-related services, e.g. Karvy, Cams.
Underwriter – A person or agency that
guarantees for public subscription to a given
no. of shares.
10/16/2012
7. Capital Market – An Overview
Primary Equity Market
o Working in India since late nineteenth century.
o Remained dull & inactive till 1991.
o Control of Capital Issues Act abolished & SEBI
formed as governing body to regulate the
primary market.
o Companies now free to fix price of their shares &
interest on debt securities.
o Disclosure of Investor Protection Guidelines made
compulsory.
o New shares to be issued only in dematerialised
form.
10/16/2012
8. Nature of
Primary Market
1) Market for New Equity Capital – Deals only with securities
sold for the first time. Also called the New Issues Market.
2) Direct Issuance of Securities – The securities are issued
directly to the investors in a Primary Market.
3) Used by Companies – Helps companies to raise funds to set
up new business or expanding & modernising the existing
business.
4) Capital Formation – Facilitates the flow of idle money in the
market for economic growth & development.
5) Private going Public – Used to raise funds by converting
private capital into public capital.
6) Sale of Securities – Securities can only be sold by original
investors.
10/16/2012
9. Nature of
Secondary Market
1) Transfer of Securities – Securities can be sold
& transferred from one person to another.
2) Liquidity – Availability of fixed place &
presence of large no. of investors makes the
securities easily sellable.
10/16/2012
10. Trading
• Only listed & permitted securities traded on
Stock Exchange.
• Investors need to place their orders with the
members / brokers of the exchange.
10/16/2012
11. Ways of Trading
Open Outcry System
• There are several trading posts for different
securities.
• Traders or their representative shout and
respond to signals on these posts.
• Sellers quote their rates and buyers make
their bids.
• Bargains are closed at a mutually agreed
prices.
10/16/2012
12. Ways of Trading
Screen-based System
• Used widely around the globe.
• Trading floor is replaced by the computer
screen.
• Trading carried on at a very fast speed.
• Traders sitting at distant places can buy or sell
securities through network of computers.
10/16/2012
14. SEBI
• Came into existence in 1989 by the Ministry
Of Finance.
• Prime objective is to control & regulate the
Primary & Secondary Markets to protect the
interests of the investors.
10/16/2012
15. SEBI’ s Guidelines
1. Regulating the Securities Markets.
2. Register & regulate the market intermediaries, like
Brokers, Investment Bankers, etc.
3. Register & regulate working of Mutual Funds.
4. Promote & regulate self-regulatory organisations.
5. Prohibit unfair trade practices in securities market.
6. Promote investor education.
7. Training of intermediaries.
8. Prohibit insider trading.
9. Regulate acquisitions & take-overs.
10/16/2012
17. • Some people invest in a business to acquire
control and enjoy the prestige associated with
it.
• Desire to earn return leads to bearing some
risk.
• Risk and Return are center points of
investment decisions.
10/16/2012
18. The Concept
• Risk refers to the possibility that the actual outcome of
an investment will differ from its expected outcome.
• A mix of danger and opportunity.
• The wider the range of possible outcomes, the greater
the risk.
• Biggest risk – Not investing at all.
• Also known as reward for understanding towards
investments.
• Risk – averse means willing to sacrifice some return to
reduce risk.
10/16/2012
19. The Concept
The three types of Risk:
1) Business Risk
2) Interest Rate Risk
3) Market Risk
10/16/2012
20. Business Risk
• Associated with poor business performance.
• May be due to high competition, new
technology, substitute products, change in
consumers’ preferences, change in govt.
policies, etc.
• Affects the interests of equity shareholders who
have claim on income and wealth of the
company.
• May also affect the interests of debentureholders
sometimes.
10/16/2012
21. Interest Rate Risk
• Affects the welfare of investors.
• Market price of existing fixed income
securities fall, when the interest rate goes up.
• When the prevailing interest rate is lower than
fixed rate, buyer would not buy it at its face
value.
• Also affects the equity shares’ price indirectly.
10/16/2012
22. Market Risk
• Associated greatly with the sentiments of the
investors.
• When the investors are bullish &
optimistic, share prices tend to rise high.
• Similarly, when the investors are bearish &
pessimistic, share prices tend to decline.
10/16/2012
24. Systematic Risk
• Associated with firm-specific factors
like, emergence of new products, labour
strike, etc.
• Affects a specific firm and not the sector
generally.
• Can be washed away by diversifying portfolio
(combining with other stocks).
• A favourable development in one firm may
offset an adverse happening in another.
10/16/2012
25. Unsystematic Risk
• Associated with national economic factors like
GDP growth rate, level of govt.
spending, interest rates, inflation, etc.
• Cannot be avoided, as these factors affect all
the firms.
10/16/2012
26. Measuring Historical Return
Cash payment received Price change over
during the period + the period
Total Return =
Price of Investment at the beginning
10/16/2012
28. Measuring Historical Return
C + (PE – PB)
R=
PB
where,
R is the total return over the period,
C is the cash payment received during the period,
PE is the price of investment at the end of period, &
PB is the price of investment at the beginning of period.
10/16/2012
29. Measuring Expected Return
• Investment in a stock can take various possible
values and the chances of these possible
values can vary.
• If we say there is 3 to 1 chance that the price
of a stock will rise in a certain period say, one
month, it means that there is a 75% chance of
price rise & 25% chance of price decline.
10/16/2012
31. Measuring Expected Return
• If we say -
• Stock A may provide return of 6%, 11% or 16%
with certain probabilities based on state of
economy, &
• Stock B may provide return of -20%, 10% or
40% with same probabilities based on state of
economy….………
• Their probability distribution of returns shall
be as -
10/16/2012
32. Measuring Expected Return
State of Economy Probability of Rate of Return (%)
Occurrence Stock A Stock B
Boom 0.30 16 40
Normal 0.50 11 10
Recession 0.20 6 -20
10/16/2012
33. Measuring Expected Return
• Expected Rate of Return is weighted average of all
possible returns multiplied by their respective
probabilities.
• The formula –
n
E(R) = ∑ Ri Pi
i=1
Where E(R) is the expected return,
Ri is the return under state i,
Pi is the probability that state i occurs, &
n is the no. of possible states of the economy.
10/16/2012
34. State of Economy Probability of Rate of Return (%)
Occurrence Stock A Stock B
Boom 0.30 16 40
Normal 0.50 11 10
Recession 0.20 6 -20
Expected return of Stock A shall be
E(R) = (0.30)(16)+(0.50)(11)+(0.20)(6) = 11.5%
Expected return of Stock B shall be
E(R) = (0.30)(40)+(0.50)(10)+(0.20)(-20) = 13.0%
10/16/2012
35. Measuring Expected Return
σ² = ∑ pi (Ri – E(R))²
Where
σ² is the variance
Ri is the return for the ith possible outcome
Pi is the probability with the ith possible
outcome, &
E (R) is the expected return
10/16/2012
37. Calculation of Standard Deviation
Stock A
i. State of pi Ri piRi Ri – E(R) (Ri – E(R))² Pi(Ri-
Economy E(R))²
1. Boom 0.30 16 4.8 4.5 20.25 6.075
2. Normal 0.50 11 5.5 -0.5 0.25 0.125
3. 0.20 6 1.2 -5.5 30.25 6.050
Recession
E(R) = ∑piRi = 11.5 σ² = ∑pi(Ri – E(R))² = 12.25
σ = *∑pi(Ri-E(R))²]½ = (12.25)½ = 3.5%
10/16/2012
38. Valuation of Equity
• Fixed income securities have limited life &
fixed returns.
• Equity shares have unlimited life & uncertain
returns.
• The valuation of equity is complex due to
growth & risk factors.
10/16/2012
39. Valuation of Equity
Two approaches to Equity Valuation are -
1. Fundamental Analysis
2. Technical Analysis
10/16/2012
40. Valuation of Equity
1) Fundamental Analysis: Examines the assets,
earning prospects, cash flow projections &
dividend potential to assess fair market value
of equity shares.
10/16/2012
41. Valuation of Equity
2) Technical Analysis: Focuses on price
trends, volume trends & other market
indicators to assess fair market value of equity
shares.
10/16/2012
42. Valuation of Equity
Balance Sheet Technique
•Book Value
•Liquidation Value
•Replacement Cost
Discounted Cash Flow Technique
Fundamental Equity
Valuation •Dividend Discount Model
•Free Cash Flow Model
Relative Valuation Techniques
•Price – Earnings Ratio
•Price – Book Value Ratio
•Price – Sales Ratio
10/16/2012
44. Balance Sheet Valuation
1) Book Value: Net worth of a company divided
by the no. of outstanding equity shares.
Net worth = Paid-up Equity Shares + Reserves
& Surplus
Book Value = Net Worth / No. of Equity Shares
10/16/2012
45. Balance Sheet Valuation
2) Liquidation Value: It is the value realised after
liquidating all the assets of the firm & amount
paid to creditors and shareholders divided by the
no. of outstanding equity shares.
Value realised from Amt. to be paid to creditors
LV= all assets of firm - & Preference Shareholders
No. of Outstanding Equity Shares
Although liquidation value appears more realistic, it
is very difficult to estimate the amounts to be
realised after liquidation of assets. Also, it does
not reflect the earning capacity.
10/16/2012
46. Balance Sheet Valuation
3) Replacement Cost: It is the cost of replacement
of assets less liabilities. It is assumed here that
market value of a firm cannot deviate much from
its replacement cost. The ratio of market price to
replacement cost is called Tobin q.
Limitation of Replacement Cost is that
organisational capital is not shown in the balance
sheet. Organisation capital is the group of people
associated with the firm, directly or
indirectly, such as
employees, customers, suppliers, etc in a
mutually beneficial and productive relationship.
10/16/2012
48. Discounted Cash Flow Techniques
1) Dividend Discount Model: According to this
model, the value of a share is equal to the
present value of dividends expected plus the
present value of share expected when it is
sold. It is assumed here that dividends are
paid annually and the first dividend is received
after one year of buying the share.
10/16/2012
49. Discounted Cash Flow Techniques
1) Dividend Discount Model:
a. Single Period Valuation: It is the case where
the investor is expected to hold the share for
one year.
D1 P1
P0 = +
(1 + r) (1+r)
10/16/2012
50. Discounted Cash Flow Techniques
1) Dividend Discount Model:
b. Multi-Period Valuation: It is the case where
the investor is expected to hold the shares for
more than one year.
D1 D2 D∞
P0 = + +-----+
(1+r) (1+r)² (1+r)∞
10/16/2012
51. Discounted Cash Flow Techniques
1) Dividend Discount Model:
c. Zero Growth Model: It is the case where
dividend per share remains constant year
after year.
P0 = D
r
10/16/2012
52. Discounted Cash Flow Techniques
1) Dividend Discount Model:
d. Constant Growth Model: It is the case where
the dividend grows at a constant rate (g).
D1
P0 =
r-g
10/16/2012
53. Discounted Cash Flow Techniques
2) Free Cash Flow Model: This model involves the following
procedure:
a) Dividing the future into Explicit Forecast Period &
Balance Period: This is the period during which the firm is
expected to grow & reach a steady state.
b) Forecasting the Free Cash Flow (cash available for
distribution to shareholders & debtholders after
providing for investment in fixed assets & net working
capital required) during the Explicit Forecast Period:
FCF = NOPAT – Net Investment
NOPAT = Net Operating Profit after adjusting for taxes
10/16/2012
54. Discounted Cash Flow Techniques
c) Calculating the weighted average cost of capital:
WACC = Were + Wprp + Wdrd (1-t)
Where ‘w’ is the weight associated with
equity, preference & debt;
r is the cost associated with equity, preference & debt.
d) Establishing the Horizon Value of the firm: It is the
value placed on the firm at the end of explicit forecast
period (H).
FCF (1+g)
VH =
WACC - g
10/16/2012
55. Discounted Cash Flow Techniques
e) Estimating the Enterprise Value:
FCF1 + FCF2 + ...... + FCFH VH
EV = (1+WACC) (1+WACC) 2 +
(1+WACC)H (1+WACC)H
f) Deriving the Equity Value:
Equity Value = Enterprise Value – Preference Value – Debt
Value
g) Computing the value per share: It is the equity value
divided by the no. of outstanding equity shares.
10/16/2012
57. Relative Valuation Technique
1) Price – Earning Ratio: It is the value after
dividing dividend per share by the share price
or earning per share divided by the share
price.
D1 E1
P0 = OR
r r
Where r is the Expected Return.
10/16/2012
58. Relative Valuation Technique
2) Price to Book Value Ratio: Book value is the
net worth of the company divided by the no.
of equity shares.
Market Price Per Share at time t
PBV Ratio=
Book Value Per Share at time t
OR
P0
PBV Ratio=
BV0
10/16/2012
59. Relative Valuation Technique
3) Price to Sales Ratio: It is calculated by
dividing current market value of equity capital
by annual sales of the firm.
P S Ratio = P0
S0
10/16/2012
61. Meaning & Characteristics of Bonds
A Bond is a security issued that obligates the
issuer to make specified
payments, i.e., interest & principal, to the
bondholder.
It may be characterised in terms of par
value, coupon rate & maturity date.
10/16/2012
62. Meaning & Characteristics of Bonds
• Par Value is the value that is stated on the face
of the bond and represents the amount the
issuer promises to pay at the time of maturity.
• Coupon Rate is the rate at which the interest
is payable to the bondholder.
• Maturity Date is the date at which the
principal amount is payable to the
bondholder.
10/16/2012
63. Valuation
Value of a Bond is equal to the present value of
the cash flows expected from it. Determining
the value of a bond requires -
An estimate of expected cash flows
An estimate of the required return
10/16/2012
64. Valuation
Bond with Annual Interest
Assuming that
o The coupon rate is fixed for the entire term,
o The coupon payments are made every year, &
o The bond will be redeemed at par on maturity.
Value of a bond shall be;
C M
P=∑ t
+
(1+r) (1+R)n
10/16/2012
65. Valuation
Where,
P is the value;
n is the number of years to maturity;
C is the annual coupon payment;
r is the periodic required return;
M is the maturity value; &
t is the time period when the payment is
received.
10/16/2012