...Corporate Bond What Does Corporate Bond Mean? A debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds. Corporate bonds are considered higher risk than government bonds. As a result, interest rates are almost always higher, even for top-flight credit quality companies. Investopedia explains Corporate Bond Corporate bonds are issued in blocks of $1,000 in par value, and almost all have a standard coupon payment structure. Corporate bonds may also have call provisions to allow for early prepayment if prevailing rates change. Corporate bonds, i.e. debt financing, are a major source of capital for many businesses along with equity and bank loans/lines of credit. Generally speaking, a company needs to have some consistent earnings potential to be able to offer debt securities to the public at a favorable coupon rate. The higher a company's perceived credit quality, the easier it becomes to issue debt at low rates and issue higher amounts of debt. Most corporate bonds are taxable with terms of more than one year. Corporate debt that matures in less than one year is typically called "commercial paper". Capital Markets What Does Capital Markets Mean? A market in which individuals and institutions trade financial securities. Organizations/institutions...
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...1.0 Introduction Bond valuation is the determination of the fair price of a bond. As with any security or capital investment, the theoretical fair value of a bond is the present value of the stream of cash flows it is expected to generate. This essay is about different types of bonds and the instruction of the riskiness of bonds. Firstly, this essay will make a general overview of the types of bonds. Subsequently it will discuss the types of risks to which both bond investors and issuers are exposed. Finally it will make an analysis of the bond markets. 2.0 Basic information of bonds Bond is a form of long-term debt instrument. For example, a contractual liability, basically just a certificate showing that a borrower promises to repay interest and principal, on specific dates, to the holders of the bond. Bonds are one of the most important types of securities. There is a wide variety of these securities. It may seem confusing, but in actuality just a few characteristics distinguish the various types of bonds. 3.0 Various Types of Bonds Bonds are issued by both governments and corporations. Bonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets. The most common process for issuing bonds is through underwriting. When a bond issue is underwritten, one or more securities firms or banks, forming a syndicate, buy the entire issue of bonds from the issuer and re-sell them to investors. The security firm...
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...Different Types of Financial Markets in Bangladesh. A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods. The financial market in Bangladesh is mainly of following types: 1. Money Market: A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year. Money market securities consist of negotiable certificates of deposit (CDs), banker’s acceptances, Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos). There are currently 15 primary dealers (12 banks and 3 FIs) in Bangladesh. The only active secondary market is overnight call money market which is participated by the scheduled banks and FIs. The money market in Bangladesh is regulated by Bangladesh Bank (BB), the Central Bank of Bangladesh. 2. Capital market: A market in which individuals and institutions trade financial securities. Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary...
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...AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 2: An Overview of the Financial System 1. Function of Financial Markets and Financial Intermediaries 2. Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 3. Financial Instruments Money Market Instruments Capital Market Instruments 4. Role of Financial Intermediaries Transaction Costs and Economies of Scale Risk Sharing and Diversification Adverse Selection and Moral Hazard 5. Types of Financial Intermediaries Depository Institutions (Banks) Contractual Savings Institutions Investment Intermediaries This chapter provides an overview of the financial system in the US economy by describing the various types of financial markets, financial instruments, and financial institutions or intermediaries that exist. 1 The chapter begins with a general statement that clarifies what function financial markets and financial intermediaries have in the economy as a whole. It then deals more specifically with: The structure of financial markets and the ways in which different types of financial markets can be distinguished. Here, it discusses debt versus equity markets, primary versus secondary markets, exchanges versus over-the-counter markets, and money versus capital markets. The various types of financial instruments, including both money market instruments and...
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...Financing Proposal WU Shizhi 1155068485 Company background Property Holdings Ltd is a real estate owner and developer. The group is one of the largest property developers in China. It develops and sells residential properties. It also operates in hotel and commercial properties industry. Agile has land in Hainan, Shanghai, Nanjing, Changzhou, Chengdu, Xi’an, Chongqing, Shenyang, Tianjing, Guangzhou, Foshan, Zhongshan, Huizhou and Heyuan. Ownership structure 62% stock shares of the company are held by Top Coast Investment Ltd whose major shore holder is the family of the founder of Agile. The second largest shareholder JP Morgan Chase & Co holds 4.38%. Dimensional Fund Advisors Ltd and Blackrock hold 1.18% and 1.16% shares, respectively. The estimated public float is between 30% and 35%. Capital Structure The total assets account for RMB 124,367 million. The company owns short-term borrowings and long-term borrowings RMB 16,363 million and RMB 26,203 million. The shareholders’ equity is RMB 33,851 million. The company’s total debt accounts for 34.2% of total assets. Its net debt/total equity is 72.4% and debt/common stock is 125.8%. Benchmark against the comparables There are lots of property companies in China or listed companies in Hong Kong. However, the most comparable companies should be property companies operating in mainland China but list in Hong Kong. Thus, the eligible comparable companies are Country Garden, Evergrande, Longfor, China Aoyuan...
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...Monitoring Financial Market The market where securities are sold and purchase is called financial market. Financial System The system in which the surplus and deficit which meets together for their mutual benefits. e.g. Bank loan. Surplus Unit The units which have excess money. Deficit Unit The units which need money. Financial Intermediaries The bank, person or party, financial institution which act as a middle man between surplus and deficit units are called financial intermediaries. Three types of financial intermediaries (1) Investment Bank (2) Broker (3) Dealer Investment Bank (a) Under Writing or Initial Public Offering (IPO) IPO: The first prize of the security (b) Best Efforts Offering Underwriting In under writing the bank took the security from the company and tries to sell them in the market. The unsold securities should be purchased by bank. Purchased these securities less than “IPO” price. Best Efforts Offering In this service the bank took the securities from the company and tries to sell in the market. The amount of sold securities and unsold securities return back to the company. Broker (Agent) It is a person which act or perform on the behalf of the owner. Dealer It is a person which work independently Types of Financial Market There are five major types 1 Primary Market 2 Secondary Markets 3 Money Market 4 Capital Market 5 Over the Counter Market (1) Primary Market The market where the new securities...
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...or principal on its debt obligations. This type of risk is of particular concern to investors who hold bonds in their portfolios. Government bonds, especially those issued by the federal government, have the least amount of default risk and the lowest returns, while corporate bonds tend to have the highest amount of default risk but also higher interest rates. Bonds with a lower chance of default are considered to be investment grade, while bonds with higher chances are considered to be junk bonds. * Business Risk: This is the risk that issuers of an investment may run into financial difficulties and not be able to live up to market expectations. For example, a company’s profits may be hurt by a lawsuit, a change in management or some other event. * Interest Rate Risk: The risk caused by changes in the general level of interest rates in the marketplace. This type of risk is most apparent in the bond market because bonds are issued at specific interest rates. Generally, a rise in interest rates will cause a decline in market prices of existing bonds, while a decline in interest rates tends to cause bond prices to rise. For example, say you buy a 30-year bond today with a 6% annual yield. If interest rates rise, a new 30-year bond may be issued with an 8% annual yield. The price of your bond drops because investors aren’t willing to pay full value for a bond that yields less than the current rate of interest. * Market Risk: The risk that the value of your investment...
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...FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 2: An Overview of the Financial System 1. Function of Financial Markets and Financial Intermediaries 2. Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 3. Financial Instruments Money Market Instruments Capital Market Instruments 4. Role of Financial Intermediaries Transaction Costs and Economies of Scale Risk Sharing and Diversification Adverse Selection and Moral Hazard 5. Types of Financial Intermediaries Depository Institutions (Banks) Contractual Savings Institutions Investment Intermediaries This chapter provides an overview of the financial system in the US economy by describing the various types of financial markets, financial instruments, and financial institutions or intermediaries that exist. 1 The chapter begins with a general statement that clarifies what function financial markets and financial intermediaries have in the economy as a whole. It then deals more specifically with: The structure of financial markets and the ways in which different types of financial markets can be distinguished. Here, it discusses debt versus equity markets, primary versus secondary markets, exchanges versus over-the-counter markets, and money versus capital markets. The various types of financial instruments, including both money market instruments...
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...OUTLINE How are Price and Yield of a Bond Calculated? • Calculating the Fair Price of a Bond • Calculating the Yield on a Treasury Bill • Calculating the Current Yield on a Bond • Calculating the Yield to Maturity on a Bond What is the Term Structure of Interest Rates? • The Real Rate of Return • The Yield Curve What are the Fundamental Bond Pricing Properties? • The Relationship Between Bond Prices and Interest Rates • The Impact of Maturity • The Impact of the Coupon • The Impact of Yield Changes • Duration as a Measure of Bond Price Volatility What are Bond-Switching Strategies? How does Bond Market Trading Work? • Clearing and Settlement • Calculating Accrued Interest © CSI GLOBAL EDUCATION INC. (2011) 7•3 What are Bond Indexes? • Canadian Bond Market Indexes • Global Indexes Summary LEARNING OBJECTIVES By the end of this chapter, you should be able to: 1. Defi ne present value and the discount rate, and perform calculations relating to the time value of money, bond pricing and yield. 2. Defi ne a real rate of return and a yield curve, and evaluate three theories of interest rate determination. 3. Analyze the impact of fi xed-income pricing properties on bond prices. 4. Explain the rationale for bond switching and describe bond-switching strategies. 5. Summarize the rules and regulations of bond delivery and settlement. 6. Assess the role of bond indexes in the securities industry. THE FIXED-INCOME MARKET IN ACTION Before they invest in or...
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...Investment banking process for an Initial Public Offering: * The process of Initial Public Offering starts when a firm wants to raise its capital by selling or floating its securities. These securities can be in the forms of bonds or stocks or other types, which will be first sold to the public through primary market. The selling of securities to the market can only be called Initial Public Offering when it is the first time that the company sells its securities to the public. The process of IPO through investment bankers is as the following: * 1. Forming of underwriting syndicate: usually more than one investment bankers help the company issue its IPO. One investment banker is called underwriter than the group of investment bankers is called underwriting syndicates, in which each of them will help the client with some tasks regarding the IPO process. * 2. Terms of IPO: the underwriting syndicate will advise the client on the terms of the IPO. These terms will be incorporated into a preliminary registration statement, which will be submitted to the Securities and Exchange Commission. This form is called “red herring” which states that “the company is not attempting to sell the security before the registration is approved” (Bodie, Kane, & Marcus). The statement is called “prospectus” when it is finally approved by the SEC. * 3. Buying and reselling of securities: In a normal setting, the company will not sell its securities to the public directly. In fact,...
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...financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods. The definition may be termed as: "Financial Markets are generally known as a market where financial securities or/and assets are bought and sold by the buyers and sellers respectively." Some of the salient features of financial market are: • Transparent pricing • Basic regulations on trading • Low transaction costs • Market determined prices of traded securities Basic Functions of Financial Market: Financial market has emerged as one of the biggest markets in the world. It is engaged in a wide range of activities that cater to a large group of people with diverse needs. Six key functions of Financial Market are – 1. Borrowing & Lending: Financial market transfers fund from one economic agent (saver/lender) to another (borrower) for the purpose of either consumption or investment. 2. Determination of Prices: Prices of the new assets as well as the existing stocks of financial assets are set in financial markets. 3. Assimilation and Co-ordination of Information: It gathers and co-ordinates information regarding the value of financial assets and flow of funds in the economy. 4. Liquidity: The asset holders can sell or liquidate their assets in financial market. 5...
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...------------------------------------------------- Top of Form Bottom of Form * Bond Markets / Prices * Commentary * Learn More * Overview * Bond Basics * What You Should Know * Buying and Selling Bonds * Types of Bonds * Strategies * Bonds at Your Stage of Life * About Municipal Bonds * About Government/Agency Bonds * About Corporate Bonds * About MBS/ABS * How to Use This Site * Links to Other Sites Learn More * Overview * Bond Basics * What You Should Know * Overview * The Role of Bonds in America * Investor's Checklist * Investor Protection * Asset Allocation * Reading Bond Prices In the Newspaper * Understanding Economic Statistics * Bond and Bond Funds * Risks of Investing in Bonds * Rating Changes and Your Investments * Corporate Bankruptcy & Your Investment * Selecting and Working with a Financial Professional * Rising Rates and Your Investments * Tax Tables * Buying and Selling Bonds * Types of Bonds * Strategies * Bonds at Your Stage of Life * About Municipal Bonds * About Government/Agency Bonds * About Corporate Bonds * About MBS/ABS * How to Use This Site * Links to Other Sites What You Should Know * Print * Email Risks of Investing in Bonds All investments offer a balance between risk and potential return. The...
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...Financial Markets, Questions 1-16. 1. Mutual Fund Services Explain why mutual funds are attractive to small investors. How can mutual funds generate returns to their shareholders? ANSWER: Mutual funds enable small investors to benefit from a portfolio manager’s expertise, and from diversification capabilities due to a large portfolio. Mutual funds can provide dividends or capital gain distributions to investors. In addition, investors also benefit from share price appreciation; they may be able to sell the shares at a higher price then what they paid. 2. Open- versus Closed-End Funds How do open-end mutual funds differ from closed-end funds? ANSWER: Shares of open-end mutual funds can be sold back to the sponsoring investment company, whereas shares of closed-end mutual funds cannot. 3. Load versus No-Load Mutual Funds Explain the difference between load and no-load mutual funds. ANSWER: Load mutual funds require a fee to help pay for marketing commissions. No-load mutual funds do not require such a fee. 4. Use of Funds Like mutual funds, commercial banks and stock-owned savings institutions sell shares, but the proceeds received by mutual funds are used in a different way. Explain. ANSWER: Shares issued by commercial banks and savings institutions are used to obtain capital, which may be used to finance their fixed assets such as land and buildings. Shares issued by mutual funds are used to obtain funds, which are invested in the mutual funds portfolio. 5. ...
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...Accessing The Application 05 Logging In 06 Bloomberg Panels 07 FUNCTIONS & SECURITIES 07 Running Functions 08 Working With Securities 10 NAVIGATION 10 Basic search (Autocomplete) 11 Full Search 12 Browsing Menus 13 PERFORMING ANALYSIS 13 Navigating Functions 14 Stock/Company Screening 15 Analyzing a Company 16 Analyzing an Index, Bond or Currency 17 EXPORTING DATA 17 The Bloomberg Excel Add-In 20 Drag & Drop 20 Printing & Other Export Options 20 GETTING HELP & LEARNING MORE 22 APPENDIX 22 Equity 22 Fundamental Analysis 23 Analytics 24 M&A Analysis 24 Fixed Income 26 Swaps 27 Money Markets 28 Structured Finance Analytics 29 Price Discovery 29 Analytics 29 Descriptive 30 Relative Value 30 Ticketing 30 Hedging 30 Additional Fixed-Income Functions 32 FI Futures & Options 33 Repo Analysis Data 33 CALCULATORS 33 High Yield/Syndicated Loans/ Distressed Research 34 Municipal Bonds INTRODUCTION For more than 20 years, Bloomberg has been committed to helping universities and colleges incorporate the Bloomberg Professional® service into their academic programs to better prepare students for the global job market. Universities and colleges around the globe use Bloomberg to bring the real world of finance into the classroom, providing students with access to the same information platform used by leading decision makers in business, finance and government. The Bloomberg Professional service and Bloomberg Terminal seamlessly integrate the very best in data, news...
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...accessing the application 04 Logging In 05 bloomberg Panels 06 FUNCTIONS & SECURITIES 06 Running Functions 07 Working with Securities 09 basic Search (autocomplete) 10 Full Search 11 browsing Menus 09 NavIGaTION 12 PERFORMING aNaLySIS 12 Navigating Functions 13 Stock/Company Screening 14 analyzing a Company 15 analyzing an Index, bond or Currency 16 ExPORTING DaTa 16 The bloomberg Excel add-In 19 Drag & Drop 19 Printing and Other Export Options 20 GETTING HELP aND LEaRNING MORE CONTENTS>>>>>>>>>> 21 aPPENDIx 21 Equity 21 Fundamental analysis 22 analytics 23 M&a analysis 23 Fixed Income 25 Swaps 26 Money Markets 27 Structured Finance analytics 28 Price Discovery 29 analytics 29 Descriptive 29 Relative value 29 Ticketing 29 Hedging 30 additional FI Functions 31 FI Futures and Options 32 Repo analysis Data 32 Calculators 33 High yield/Syndicated Loans/Distressed Research 34 Municipal bonds INTRODUCTION For more than 20 years, bloomberg has been committed to helping universities and colleges incorporate the bLOOMbERG PROFESSIONaL® service into their academic programs to better prepare students for the global job market. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Universities and colleges around the globe use Bloomberg to bring the real world of finance into the classroom, providing students with access to the same information platform used by leading decision makers in business, finance and government. The BLOOMBERG PROFESSIONAL® service and BLOOMBERG...
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