bond and stock value - example
Stocks and bonds(股票和债券的异同)
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投资者视角：股票与债券 融资者者视角：股票与债券 股票与债券之间的联系是什么？ 总结
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投资者视角：股票与债券
不同：追索权&风险
不同：追索权和风险是不一样的。 不管是股票还是债券，它代表的都是金融追索权， 也就是说你对这个公司盈利进行索取的权利。 不同的是 股票是你拥有的“剩余追索权”，也就是公司要扣 除所有的成本，包括利息，剩下的部分才会给你分 红。而且这种分红是不具有强制力的。所以为了补 偿你，公司就给你投票权。 债券具有的是“优先追索权” 。不管企业经营好坏， 它必须按时按点地付给你承诺的利息，所以这种收 益是固定的。因为这种确定性的回报，所以债券的 收益率会比较平缓。
总结
致谢！
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总结
总结 1、对投资者来说，股票和债券代表的都是金融追索 权，但是股权代表的是剩余追索权，他的风险很大； 而债权代表的是优先追索权，它的风险小； 2、对融资者来说，如果一个项目业绩稳定，盈利好， 它就不希望更多的人分享收益，所以债权融资的意 愿高。反之，一个项目如果前景美好，但是不确定 性大，融资者就需要避免被沉重的利息压倒，就会 尽量的选股权融资； 3、金融市场本质上是一个关于各种债务关系的市场。
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股票与债券之融市场就是一个关于各种债务关系的市场，在这 个市场上，抽象的、虚拟的债务关系被具象为各种 价格和数字来进行交易。 我们交易的是这些价格和数字背后的权利和义务， 而这些权利和义务其实就是可以被量化的责任。 股票=带有所有权和经营权的债务=产权。 债券=纯粹的债权。
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融资者者视角：股票与债券
不同：股东&债权人
不同：股东和债权人的权利是完全不一样的。 股东和公司的风险是一致的，盈利时一起获得收益， 亏损时也一起承担。 债权人和公司的利益不一样，如果公司遇上经营困 难，债权人可能会加重公司的困难。 所以，融资者在选择股权还是债权融资的时候，心 态是截然不同的。 一般来讲，假设这个融资的人，他手里的项目，业 绩非常的稳定，盈利很好，那么从融资者角度，债 权融资更有利。 假如一个项目，前景很好，但是不确定性很大，融 资者为了避免被沉重的利息压倒，会尽量选择股权 融资。
财务管理专业英语 -Bond and Stock
2. Basic elements of bond
Bond(债券) Par value (面值) Coupon rate(券面利率) Coupon payment(利息支付) Maturity date(到期日) Time to maturity(到期时间) Yield to maturity(到期收益率)
– Dividends are not a liability of the firm and stockholders have no legal recourse if dividends are not paid
– An all equity firm can not go bankrupt
The Bond Indenture(债券契约)
2020/3/21
Equity
– Ownership interest
– Common stockholders vote for the board of directors and other issues
– Dividends are not considered a cost of doing business and are not tax deductible
If YTM > coupon rate, then par value > bond price
– Why? – Selling at a discount, called a discount bond
If YTM < coupon rate, then par value < bond price
Present value = 1000/(1+0.10)10 = 385.5 Second, the ﹩100 coupons continue for ten years;
(6)债券和股票
债券的种类：
政府债券 国债 地方政府债券 金融债券 公司债券
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债券定价的基本原理
P — 债券的价格(bond price) i —债券的到期收益率（yield-to-maturity rate, internal rate
4Байду номын сангаас
1. Money market instruments are cash-like investments that consist of short-term, liquid, low-risk debt securities. Money market: part of the fixed income market, that is, the income generated by these investments is fixed at issue. Liquid asset: can be easily purchased and resold on a secondary market with low transaction cost. Examples: T-bills (Treasury bills), certificates of deposit, commercial paper.
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6. Guaranteed investment contracts Are offered by insurance companies and promise a guaranteed rate of return. The investor often has no access to the funds before maturity. A term-to-maturity of 5 years is common. Are considered illiquid. Are treated as insurance contracts rather than investment contracts, because they include an option for the investor to purchase an annuity with the proceeds at the maturity.
债券及股票的定价策略(英文版)
债券及股票的定价策略(英文版)In finance, pricing strategies for bonds and stocks are crucial for investors and financial institutions to determine the fair value of these financial securities. This helps in making informed investment decisions and managing investment portfolios effectively. Let's explore the pricing strategies for bonds and stocks.Bond Pricing Strategy:1. Discounted Cash Flow (DCF) Analysis: This strategy involves calculating the present value of future cash flows generated by the bond. The cash flows include periodic interest payments and the bond's face value at maturity. The present value is determined by discounting these cash flows using an appropriate discount rate, usually the bond's yield to maturity (YTM).2. Comparable Bond Analysis: This strategy relies on comparing the bond in question with similar bonds in the market. By analyzing similar bonds' yields and prices, investors can assess whether the bond is overvalued or undervalued. Factors considered in this analysis include credit rating, coupon rate, maturity, and market conditions.3. Yield Spread Analysis: This strategy involves analyzing the yield spread between a particular bond and a benchmark bond with similar characteristics but different credit ratings. If the yield spread is wider than historical levels, indicating higher risk, the bond may be priced at a discount. Conversely, a narrower yield spread implies a premium.Stock Pricing Strategy:1. Dividend Discount Model (DDM): This strategy focuses on estimating the intrinsic value of a stock based on its future dividends. The DDM involves discounting expected future dividends to the present value using an appropriate discount rate, such as the stock's required rate of return or the dividend growth rate.2. Price-to-Earnings (P/E) Ratio Analysis: This strategy evaluates a stock's value by comparing its market price to its earnings per share (EPS). A low P/E ratio may suggest an undervalued stock, while a high P/E ratio could indicate an overvalued stock. This analysis considers industry P/E ratios, earnings growth prospects, and other relevant factors.3. Comparable Company Analysis: This strategy involves comparing the valuation metrics of a company with its industry peers or similar companies. Parameters such as price-to-sales ratio, price-to-book ratio, or enterprise value-to-EBITDA ratio are compared to identify relative valuation. If a company's valuation is significantly lower than its peers with similar fundamentals, it may be considered undervalued.Both bond and stock pricing strategies require careful analysis of various quantitative and qualitative factors. It is crucial for investors to consider the fundamental characteristics of the security, market conditions, economic indicators, interest rates, and other relevant factors. Additionally, incorporating risk assessment and future market expectations into these pricing strategies enhances their accuracy.Bond Pricing Strategy (Continued):4. Term Structure of Interest Rates Analysis: This strategy takes into account the term structure of interest rates, which shows the relationship between the yields and maturity dates of bonds. By comparing the yields of bonds with different maturities, investors can assess the expectations of future interest rate movements. If the current bond's yield is higher than the expected future rates, it may be undervalued, and vice versa.5. Credit Rating Analysis: Credit ratings assigned by rating agencies provide an indication of a bond's creditworthiness. Higher-rated bonds typically have lower yields due to lower perceived risk. Investors can analyze the bond's credit rating and compare it to similar rated bonds to determine whether the bond is priced appropriately.Stock Pricing Strategy (Continued):4. Discounted Free Cash Flow (DCF) Analysis: This strategy estimates the intrinsic value of a stock by forecasting its future cash flows. The future cash flows are projected based on expected revenue, expenses, and capital expenditures. These cash flows are discounted to their present value using an appropriate discount rate, such as the company's cost of capital. The resulting value represents the fair value of the stock.5. Price-to-Book (P/B) Ratio Analysis: This strategy compares a company's market price per share to its book value per share. The book value represents the net assets of the company, calculated by subtracting liabilities from assets. A low P/B ratio may indicate anundervalued stock, suggesting that the market is not fully recognizing the company's tangible assets.6. Earnings Growth Analysis: This strategy looks at the growth potential of a company's earnings. Investors analyze historical earnings growth rates and projected future growth rates to assess the stock's value. A higher expected earnings growth rate may justify a higher valuation for the stock.7. Technical Analysis: This pricing strategy focuses on analyzing historical price and volume patterns of a stock to predict future price movements. Technical analysts use various tools and techniques such as charts, moving averages, and oscillators to identify trends, support and resistance levels, and other patterns that can guide investment decisions.It is important to note that these pricing strategies serve as a guide and should not be considered definitive methods of valuation. Market conditions, investor sentiment, and unforeseen events can impact the fair value of bonds and stocks. It is recommended to use a combination of these strategies and exercise caution while interpreting the results. Regular monitoring and reassessment of pricing strategies are necessary to adapt to changing market dynamics. Ultimately, investors should conduct thorough research and seek professional advice before making investment decisions.。
债券与股票的定价策略(英文版)
December 31 for this particular bond). – Since the coupon rate is 6 3/8 the payment is $31.875. – On January 1, 2002 the size and timing of cash flows are:
• The rate should be appropriate to the risk presented by the security.
路漫漫其修远兮, 吾将上下而求索
5.1 Definition and Example of a Bond
• A bond is a legally binding agreement between a borrower and a lenl amount of the loan. – Specifies the size and timing of the cash flows:
Present value of a pure discount bond at time 0:
路漫漫其修远兮, 吾将上下而求索
Pure Discount Bonds: Example
Find the value of a 30-year zero-coupon bond with a $1,000 par value and a YTM of 6%.
债券与股票的定价策略( 英文版)
路漫漫其修远兮, 吾将上下而求索
2020年4月7日星期二
Valuation of Bonds and Stock
第五章 债券和股票的定价
第五章 债券和股票的定 价
2020/12/11
第五章 债券和股票的定价
Valuation of Bonds and Stock
• First Principles:
– Value of financial securities = PV of expected future cash flows
• To value bonds and stocks we need to:
– The Par Value of the bond is $1,000. – Coupon payments are made semi-annually (June 30 and
December 31 for this particular bond). – Since the coupon rate is 6 3/8 the payment is $31.875. – On January 1, 2002 the size and timing of cash flows are:
Value of a Level-coupon bond = PV of coupon payment annuity + PV of face value
第五章 债券和股票的定价
Level-Coupon Bonds: Example
Find the present value (as of January 1, 2002), of a 6-3/8 coupon T-bond with semi-annual payments, and a maturity date of December 2009 if the YTM is 5-percent. – On January 1, 2002 the size and timing of cash flows are:
bond and stock value - example
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Example
• A taxable bond has a yield of 8% and a municipal bond has a yield of 6%
• If you are in a 40% tax bracket, which bond do you prefer?
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Example
• Suppose a firm’s stock is selling for $10.50. They just paid a $1 dividend and dividends are expected to grow at 5% per year. What is the required return?
• At what tax rate would you be indifferent between the two bonds?
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Example
• If we require a 10% real return and we expect inflation to be 8%, what is the nominal rate?
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Example 1
• Suppose Big D, Inc. just paid a dividend of $0.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for?
APS复习资料 版本2
1. Auditing 审计( Rechnungsprüfung)This course teaches us how to perform the audit process and its application（应用）for external supervision and for business control. Auditing aims to ascertain the validity and reliability of information in the financial statements, it is always performed by independent professional auditors.Generally, there are there Audit steps:1. Tests of control and assess the overall risk（控制测试和评估整体风险）E.g. in a sales system, see whether the sales are made to customer with good credit rates, so that there is no bad debts risk.2. Substantive testing(实质性测试)E.g. test transaction in detail, customer order、sales order、work order、delivery note and invoice. Review general ledger for unusual items, such as a fixed asset of $1000 which does not exist actually, review the sale record and check the goods dispatched note and find that the nominal ledger reflected the transaction less than full value.Wrong:Dr: Cash 4000Accumulated depreciation 5000Cr: Fixed asset 9000Right:Dr: Cash 4000Accumulated depreciation 5000Loss on selling FA 1000Cr: Fixed asset 100003. Analytical review(分析性复合)Comparing with similar informations of prior periods and industry information, such as material cost, cost of goods sold is not transferred from inventory to cost.2. Securities Investment 证券投资(Wertpapieranlage)In this course, we have learned how to invest money in the securities market to make profit and how to raise capital in this market.For example, when a company wants to expand its business operation, such as buying a new product line, they can go to the capital market to raise money by issuing new shares or bond. At this time, investors who have excessive money can buy these shares to earn profit in the form of dividend or premium from selling the shares in a later time.However, risks are always accompanied with profit, higher risks means higher potential profit. When an investor chooses the various investment tools in the securities and capital market, they should consider the risk first. Because different investment tools bring different risks, for example: bond, stock, investment fund, etc. The risk of investment fund is lowest among them，because it includes a large number of different types of stocks and other securities, the risk is dispersed, one make loss but the other one may make profit.3. Asset evaluation 资产评估(Besitz Evaluation)In this course, I learned how to assess the value of assets for insurance, accounting, regulatory review or change of ownership purposes. The main aspects to be evaluated include the replacement costs, the remaining life and asset depreciation. This information could assist the management to make decisions.For example, if a company wants to buy another company, an essential step for them to determine whether or not to buy and spending how much money is to evaluate the assets. They may employ professional evaluator to do it. An evaluator first visit the facilities and assess the assets, then estimate current replacement value less the depletion of the assets, and research additional replacement costs and rates, finally provide a comprehensive report of findings to employer.Evaluation method:1. The cost method:Value = replacement cost * newness rate ;Replacement cost: cost of buying a new one in current market, it includes the money spend on purchasing, transportation and installation. Management, training and consulting expense incurred to use this asset are also included in replacement cost.Newness rate: remaining life / total life2. Function coefficient method(函数系数法):Value = value of similar function asset * P1/P2;P1- productivity of asset being revaluedP2- productivity of the similar function asset3. Income method( use the discount method)Value n n i i i r r A r R P )1(1)1('1+⋅++=∑=4. International accounting 国际会计(Internationale Buchhaltung)I have learned from International accounting course about some knowledge of German system of accounting practice. It is the representative of Nordic countries, like the Netherlands, Denmark, Sweden, Norway and Finland.There are three basic features of Germany's system of accounting practice. Firstly, accounting subject to legal requirements. Generally subject to Tax Law, Commercial law and Company Law.Secondly, to be conservative extremely and doesn’t require full panies in Germany can underestimate profits and assets legally and provide information in external accounting report as little as possible.Thirdly, prepare income statement by total cost method. It includes all cost of completed jobs and production in progress. ( →distribution cost method: It only includes achieved income and corresponding cost.)我在国际会计中学到一些关于德国会计实务体系的知识。
CHAPTER7 Bonds and Their Valuation (《财务管理基础》PPT课件)
Putable bond – allows holder to sell the bond back to the company prior to maturity.
Issue date – when the bond was issued. Yield to maturity - rate of return earned on
a bond held until maturity (also called the “promised yield”).
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Similar to amortization on a term loan. Reduces risk to investor, shortens
average maturity. But not good for investors if rates decline
after issuance.
The discount rate (ki ) is the opportunity cost of capital, and is the rate that could be earned on alternative investments of equal risk.
ki = k* + IP + MRP + DRP + LP
VB = ?
100
2
...
100
n 100 + 1,000
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USING A FINANCIAL CALCULATOR TO VALUE A BOND
lecture7 valuation of bonds and stock
Chap. 7 /8KMPLECTURE 7The Valuation Bonds and StocksValuation of bondsLearning Objectives1.Distinguish between different kinds of bonds.2.Explain the more popular features of bonds.3.Define the term value as used for several differentpurposes.4.Explain the factors that determine value.5.Describe the basic process for valuing assets.6.Estimate the value of a bond.pute a bondholder’s expected rate of return.8.Explain three important relationships that exist in bondvaluation.Slide Contents Principles used in this Chapter1.Types of Bonds2.Bond Terminology3.Bond Valuation4.Bond Yield5.Bond Valuation: Important RelationshipsPrinciples Applied inthis Chapter •Principle 3:Money has time value•Principle 3:Risk requires reward•Principle 4:Market prices are generally rightBonds•Meaning: Type of debt or long-term promissory note, issued by a borrower, promising to its holder a predetermined and fixed amount of interest per year and repayment of principal at maturity.•Issuers or Borrowers: Corporations, US Government, State and Local Municipalities.1. Types of Bonds•Debentures•Subordinated Debentures •Mortgage Bonds •Eurobonds•Convertible BondsDebentures •Debentures are unsecured long-term debt.•For issuing firm, debentures provide the benefit of not tying up property as collateral.•For bondholders, debentures are more risky than secured bonds and provide a higher yield than secured bonds.Subordinated Debenture •There is a hierarchy of payout in case ofinsolvency.•The claims of subordinated debentures are honored only after the claims of secured debt and unsubordinated debentures have been satisfied.Mortgage Bond •Mortgage bond is secured by a lien on realproperty.•Typically, the value of the real property is greater than that of the bonds issued.Eurobonds •Securities (bonds) issued in a countrydifferent from the one in whose currency thebond is denominated.•For example, a bond issued by an American corporation in Japan that pays interest and principal in dollars.Convertible Bonds •Convertible bonds are debt securities that can be converted into a firm’s stock at a pre-specified price.2. Bond Terminology•Claims on assets and income•Par value•Current yield•Coupon interest rate•Maturity•Call provision•Indenture•Bond ratingsClaims on Assets and Income •Seniority in Claims: In the case of insolvency, claims of debt, including bonds are honored before those of common or preferred stock.Par Value•Par value is the face value of the bond, returned to the bondholder at maturity.•In general, corporate bonds are issued at denominations or par value of $1,000.•Prices are represented as a % of face value. Thus a bond quoted at 112 can be bought at 112% of its par value in the market. Bonds will return the par value at maturity, regardless of the price paid at the time of purchase.Coupon Interest Rate•The percentage of the par value of the bond that will be paid periodically in the form of interest.•Example: A bond with a $1,000 par valueand 5% coupon rate will pay $50 annually(.05*1000) or $25 (if interest is paid semi-annually).Maturity•Maturity of bond refers to the length of time until the bond issuer returns the par value to the bondholder and terminates or redeems the bond.Call Provision•Call provision (if it exists on a bond) gives corporation the option to redeem the bonds before the maturity date. For example, if the prevailing interest rate declines, the firm may want to pay off the bonds early and reissue at a more favorable interest rate.•Issuer must pay the bondholders a premium.•There is also a call protection period where the firm cannot call the bond for a specified period of time.Indenture•An indenture is the legal agreement between the firm issuing the bond and the trustee who represents the bondholders.•It provides for specific terms of the loan agreement (such as rights of bondholders and issuing firm). •Many of the terms seek to protect the status of bonds from being weakened by managerial actions or by other security holders.Bond Ratings•Bond ratings reflect the future risk potential of the bonds.•Three prominent bond rating agencies are Standard & Poor, Moody’s, and Fitch Investor Services.•Lower bond rating indicates higher probability of default. It also means that the rate of return demanded by the capital markets will be higher on such bonds.Table 7-1Favorable Factors affectingBond Rating•A greater reliance on equity as opposed to debt in financing the firm•Profitable operations•Low variability in past earnings•Large firm size•Minimal use of subordinated debtJunk Bonds•Junk bonds are high-risk bonds with ratings of BB or below by Moody’s and Standard & Poor’s. Junk bonds are also referred to as high-yield bonds as they pay high interest rate, 3-5% more than AAA rated bonds.3. Valuing Bonds Defining Value•Book value:Value of an asset as shown on a firm’s balance sheet.•Liquidation value:The dollar sum that could be realized if an asset were sold individually and not as part of a goingconcern.•Market value:The observed value for the asset in the marketplace•Intrinsic or economic value:Also called fair value—the present value of the asset’s expected future cash flows.Value and Efficient Market •In an efficient market, the values of allsecurities at any instant fully reflect allavailable public information.•If the markets are efficient, the market value and the intrinsic value will be the same.What Determines Value?•Value of an Asset = Present value of its expected future cash flows using the investor’s required rate of return as the discount rate.•Thus value is affected by three elements:–Amount and timing of the asset’s expected future cashflows–Riskiness of the cash flows–Investor’s required rate of return for undertaking theinvestmentBond Valuation•The value of a bond (V) is a combination of:–C: Future expected cash flows in the form of interest and repayment of principal–n: The time to maturity of the loan–r: The investor’s required rate of returnEquation 7-1Typical cash flows on a Bond(for Corporation)Time Cash flow0Cash inflow from Bond Issue1–Maturity Pay InterestMaturity Repay PrincipalExceptions: Bankruptcy, Bond Recalled and paid off before the due date, Mergers and acquisitions.Typical cash flows on a Bond (forbondholder)Time Cash flowO Pay for bond (Buy)1–Maturity Receive InterestMaturity Receive Par value back Exceptions: Bankruptcy, Bond Recalled, Bond sold by investor in the market before maturity date, Mergers & acquisitions.Example on Bond Valuation •Consider a bond issued by Toyota with a maturity date of 2010 and a stated coupon of 4.35%. In December 2005, with 5 years left to maturity, investors owning the bonds are requiring a 3.6% rate of return.Toyota Bond Example •Step 1 (CF):Estimate amount and timing of the expected future cash flows:–Annual Interest payments= .0435 ×$1,000 = $43.50 every year for five years–The par value of $1,000 to be received in 2010Summary of Cash Flows(For One Bond)Time Bondholder Corporation 0Price = ?Price = ?1–5$43.5–$43.55+1,000–1,000•Step 2 (r)Determine the investor’s required rate of return by evaluating the riskiness of the bond’s future cash flows. Remember the investors required rate of return equals the risk free rate plus a risk premium. Here, the required rate of return (r) is given as 3.6%•Step 3:Calculate the intrinsic value of the bond.•Bond Value= PV(Interest, received every year)+ PV(Par, received at maturity)= PV($43.5, for 5 years,r= 3.6%)+ PV($1000 at year 5, i= 3.6%)= PV of Annuity (A = 43.5; N = 5; r = 3.6%) + PV of single cash flow(FV= $1,000, N= 5, i= 3.6%)= $195.84 + $837.73= $1,033.574. Bond YieldsYield to Maturity (YTM)•YTM refers to the rate of return the investor will earn if the bond is held to maturity. YTM is also known as bondholder’s expected rate of return. •YTM = Discount rate that equates the present value of the future cash flows with the current market price of the bond.Bond Yields To find YTM, we need to know:(a) current price(b) time left to maturity(c) par Value and(d) annual interest paymentCurrent Yield•Current yield is the ratio of the interest payment to the bond’s current market price.•Current Yield = Annual interest payment/current market price of the bond Example: The current yield on a $1,000 par value bond with 8% coupon rate and market price of $700= $80 / $700 = 11.4 %Total Yield•Total Yield from Bond =Current Yield+ Capital gain/loss from sale of bond.•Thus in the previous example, if the bond was bought for $700 and sold for $725.Total Yield = 80 + (725 –700)= $105 or 105/700=15%5. Bond Valuation: ThreeImportant RelationshipsRelationship #1•The value of a bond is inversely related to changes in the investor’s present required rate of return (the current interest rate).•As interest rates increase (decrease), the value of the bond decreases (increases).Bond Valuation: ThreeImportant Relationships Relationship #2•The market value of a bond will be less than the par value if the investor’s required rate of return is above the coupon interest rate.•Bond will be valued above par value if the investor’s required rate of return is below the coupon interest rate.Discount Bonds•The market value of a bond will be below the par when the investor’s required rate is greater than the coupon interest rate. These bonds are known as discount bonds.Premium Bonds•The market value of a bond will be above the par or face value when the investor’s required rate is lower than the coupon interest rate. These bonds are known as premium bonds.•If investor’s required rate of return is equal to the coupon interest rate, the bonds will trade at par.Bond Valuation: ThreeImportant Relationships Relationship #3•Long-term bonds have greater interest rate risk than do short-term bonds.•In other words, a change in interest rate will have relatively greater impact on long-term bonds.Main Risks for Bondholders •Changes in current Interest rates (if interest rates rise, the market value of bonds will fall)•Default Risk (this may mean no or partial payment on debt as in bankruptcy cases)•Call Risk (If bonds are called before maturity date)…bond are generally called when interest rates decrease. Thus investors will have to reinvest the money received from corporation at a lower rate.。
Stocks and Bonds
Stocks and BondsSome people are content to limit their investment programs to such safe investments as savings accounts and savings bonds. They take comfort in knowing that while the return from such investments may be small, it is steady and sure. Other people seek investments that involve higher risks. They understand that the amount of money an investment returns is frequently related to the amount of risk it involves. Because they want to obtain the greatest possible return on each dollar invested, they are willing to take certain chances. Still another group of people want both the comfort of safe investments and the greater dollar return of high-risk investments. Accordingly, they prefer a program that has a balance of both safe and high-risk investments.For the last two groups, the most popular types of high-risk investments are those that involve securities. Securities, which is a general term for stocks and bonds, are sold by governments and corporations in order to raise large amounts of money.There are three ways in which businesses that need a great deal of money for a long period of time can obtain that money. They can go to a bank and apply for a long-term loan. They can use the profits of the business. But banks are often reluctant to lend large amounts for periods longer than one or two years. And profits are ordinarily not large enough to finance anything very expensive. Therefore whenever businesses or governments need financing for major projects or for growth they must raise the money through the sale of securities.BondsA bond is like a promissory note, except that it is issued either by a business or by a government unit such as a city, county, or state. Whey you buy a bond, you are really lending money to the government or business from which you buy it. In return, you receive from the seller a written promise to pay you a definite sum of money, plus interest, at a future date.There are two types of bonds. Government bonds are issued by state and local governments to help pay for improvements such as streets, schools, and public buildings. Corporate bonds are issued by businesses to raise money for expansion and growth.The denomination is the sum of money that the bond represents. This sum is printed on the bond. The interest rate is set at the time a bond is issued. It remains the same until the bond matures. The maturity date of a bond is also fixed. Bonds may be issued for such periods as 10, 20, or 30 years.Suppose you bought a $1,000 bond at 6 percent interest for 20 years. Each year you would receive $60 in interest (6 percent of $1,000). The interest would probably be paid to you in two payments, $30 every six months. After 20 years, the bond would mature, and you would receive $1,000- the price you paid when you first bought the bond.Bonds may be either registered or bearer bonds. A registered bond is a bond that has the name of the owner recorded with the issuer of the bond. Interest is mailed directly to the person registered as the owner. A bearer bond is a bond whose owner is presumed to be the person who has possession of the bond. Bearer bonds are not registered. When interest payments are due on a bearer bond, its possessor clips a coupon from the bond and sends the coupon to the issuer for payment.Bonds are also classified according to the type of security that backs them up. A mortgage bond is backed by the issuer’s pledge of buildings, land and equipment as security. A debenture bond is backed only by the issuer’s promise to pay when the interest and principal are due.1.According to the text, which is considered the safest program of investment? Saving2.The essential difference between a registered bond and a bearer bond lies in that _________.3.In terms of safeness, a mortgage bond is _safer than_______ a debenture bond.4.Which can NOT be a feature of a bond?5. We can infer from the passage that the safest form of bond, in theory, is _government bond with mortgage_.StocksAs a bondholder you are a creditor of, or lender to, a business firm or government unit. As a stockholder, however, you are one of the owners of a corporation. Stock represents a share of ownership in a corporation. A stockholder may own one share or many shares of a corporation’s stock, and each share may cost several dollars or several hundred dollars.Upon purchase of a stock, a stockholder receives a stock certificate, a printed form that states the number of shares a person owns in a corporation. You can buy either common or preferred stock.Common stock is stock that permits owners to vote for directors at the annual meeting of the corporation and to share any profits or losses. Holders of common stock share indirectly in the management of the corporation by voting for the directors, who in turn appoints the people who manage the corporation. Although there is greater risk in owning common stock than in owning preferred stock or bonds, there is also the chance of a greater return on your investment. Dividends for common stock are set by the directors of the corporation according to the amount of profit. If profits are high, dividends of common stock can be much higher than for preferred stock. If profits are low, dividends many not paid to holders of commons stock. For this reason the price of shares of common stock changes more rapidly than the price of preferred stock.Preferred stock is stock with first claim on the corporation’s earnings and assets after the claims of bondholders. Preferred stock holders do not have voting rights in the corporation. Preferred stock dividends are usually set when the stock is first sold and remain the same thereafter. This means that if the dividend is set at $6 per share, preferred stockholders will usually receive this same amount each year. Preferred stock dividends must be paid before common stock dividends can be paid. Since the dividend remains the same from year to year, preferred stock is usually more stable in price than common stock.Bonds are a more secure investment than stock because a bondholder has first claim on the assets of a corporation. This means that a corporation must first pay interest to bondholders. Then stock holders are paid their interest. It also means that if a corporation goes bankrupt, the bondholders have first claim on the assets. Should a company fails, its net assets are divided first among the bondholders, then among the preferred stockholders, and finally among the common stockholders.6.Preferred stock differs from common stock essentially in that __________.7.When a corporation goes bankrupt or fails, the sequence of claim on its assets or net assets should be bondholders, preferredstockholders, common stockholders..8.Bonds differ from stocks essentially in that _________.Buying and Selling SecuritiesSecurities are generally bought and sold through investment brokers. The investment broker is the agent who processes orders for investors who want to buy or sell securities. Brokers usually buy and sell stocks through a stock exchange, which is the central market for securities. There are about 20 of these exchanges throughout the United States. The two major exchanges are the New York Stock Exchange (NYSE) and the American Stock Exchange, both located in New York.Only brokers whose firms are members of an exchange may buy or sell through that exchange. The broker receives a commission for his or her services. The commission is a percentage of the amount of the sale. When securities are first issued, they are sold at a fixed price. Once they are sold, however, the price changes greatly. Sometimes the prices change day to day, depending on supply and demand.The Stock MarketCorporations issue only a limited number of shares of stock. After those shares are purchased, they may be traded. This means that people buy and sell the shares. When you buy stock, you can never be sure you will get back what you paid for it. The price of a stock, like the price of most other goods and services, depends on how much buyers are willing to pay. The price a buyer is willing to pay depends on a number of factors. Among them are these:●The general economic outlook will influence the price of stock. When the outlook is good more people will want tobuy stock. This means there is more demand for stock, and stock prices will go up. When the economic outlook is poor,then the demand for stock drops, and prices will go down.● A corporation’s earnings will affect the price of its stock. Usually, the greater the earnings, the greater the dividends acorporation will pay. When corporate earnings are high, the stock is in demand, and prices go up.●Buyers often borrow money to buy stocks. If interest rates for borrowing are high, people do not borrow and do notbuy stock. Because the demand is low, stock prices go down.Each days transaction for stocks listed on the major stock exchanges are recorded and published in the daily newspapers. If you want to know the price of a stock, you can look in the financial section of your local newspaper.9.In the final analysis, the decisive factor that affects the market price of stock is __________.10.All of the following statements are true EXCEPT that ____________.The Bond MarketA bondholder may sell a bond before its maturity date. Bond prices, like stock prices, depend on how much people are willing to pay. However, bond prices do not change as much from day to day as stock prices. One of the factors that influence bond prices is the change of interest rates in the economy. For example, suppose you bought a $1,000 bond five years ago at a fixed rate of 5 percent interest. Your bond would pay $50 a year in interest. However, suppose that this year the interest rate on loaned money is 8 percent. A $1,000 bond purchased this year would have a fixed interest rate of 8 percent and would pay $80 a year in interest. If you wanted to sell your bond this year, no buyer would be willing to pay $1,000 for it. With a current earning interest rate of 8 percent, the buyer would lose money in buying your bond for $1,000. To sell your bond on the bond market, you would have to sell for less than $1,000. On the other hand, if interest rates in the economy had dropped below 5 percent, buyers might be willing to pay more than $1,000 for it because it has a fixed rate of interest of 5 percent.Another factor that affects the price of bonds is the credit rating of the company or government unit issuing the bond. If the credit rating of the company changes during the life of the bond, the price of the bond will change. When the credit rating goes down, the price of the bond may go down also.Corporate and government bond prices are quoted in the financial pages of newspapers, like stock prices. The quotes show the maturity date and the interest rate of the bond and give the market price of the bond that day. Bond prices are given in value per $100.A price quoted as “95” means that you could get $950 for a $1,000 bond.Considerations Before Investing in SecuritiesSecurities are not for amateurs. The securities market is full of risks for the small investor because knowing what stock to buy, when to buy, and when to sell are difficult decisions. Most investors do no have time to do the necessary research to make wise decisions. They rely on guesswork and are often wrong. However, there are several things to keep in mind if you are interested in buying securities.●Be sure you can afford the risk. Ask yourself three questions: If I make the investment, will I have enough money tomeet any emergency that may arise? Can I still cover normal living expenses? Can I afford to lose all I invest? Onceyou buy securities, you should not have to sell them to cover your day-to-day living expenses or to meet unexpectedemergencies.●Limit the risk you take. Don’t invest on the basis of tips or rumors. All too often they are wrong. Remember, there isrisk in any investment, and only you can decide how much risk you should assume. For every person who has mademoney on a rumor, there are probably ten persons who have lost money.●Get expert advice. A qualified investment broker can help you decide which securities might be best for you. Thebroker will also be glad to help you learn more about the operation of the stock market. Brokerage firms sometimeshave research departments and libraries to aid the investor. If not, the broker can tell you where you can getinformation about the market. Study the materials form your broker as well as financial magazines and the financialsection of your daily newspaper. When you are ready to buy, place your order through your broker.11.Which is usually NOT a factor that affects the price of a bond?12.Of the following, ________ are normally NOT considered a kind of securities.13.The quotes of a bond generally show all of the following EXCEPT ___________.Mutual FundsYou may want to consider either mutual funds or some other methods of investing in various stocks to decrease the risk of losingall you invest. When you invest your money, the saying “Don’t put all your eggs in one basket” has merit. By investing in the stock of several companies, there is less chance of losing all the funds you have invested. One way of doing this it to buy mutual fund shares.A mutual fund is a corporation that sells its own stocks and uses the money to invest in other corporations. You buy shares in a mutual fund, and your money is used by the mutual fund company to invest in several securities. Because they are large, mutual fund companies can employ investment analysts who study the market carefully. For this reason, mutual funds are preferred by many small investors who are not able to manage their own investments effectively. The mutual fund investor receives dividends on mutual fund shares. Most mutual funds charge a fee for their services.14. What should NOT an investor do in order to be successful in buying securities?15.Many small investors prefer mutual funds because ______________.。
债券与股票的定价策略(英文版)(PowerPoint 39页)
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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5.1 Definition and Example of a Bond
• A bond is a legally binding agreement between a borrower and a lender: – Specifies the principal amount of the loan. – Specifies the size and timing of the cash flows:
$0
0
1
$0
$0
2
29
$1,000
$0$$1,00 102 3290
30
PV
F (1 r)T
$1,000 (1.06)30
$174.11
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
• PV= $31.875 [ 1- 1/ (1.025)16 ] + $1,000 = $1,089.75
.05/2
(1.025)16
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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5.2 How to Value Bonds
• Identify the size and timing of cash flows. • Discount at the correct discount rate.
Stocksandbonds股票和债券的异同
Stocksandbonds股票和债券的异同股票和债券是证券市场中最为常见的金融产品，都是投资者进行投资的工具。
虽然它们都属于证券类别，但在许多方面存在着明显的差异。
本文将探讨股票和债券的异同之处，帮助读者更好地理解和区分这两种投资工具。
一、定义和特点股票是代表公司所有权的一种证券，投资者购买股票即成为公司的股东。
股票也被称为“股份”或“股权”，它赋予股东享有公司分红、决策和收益的权利。
股票的价格通常会随着市场供求关系的变动而波动，投资股票带来的回报不仅包括股息分配，还包括股票价格的涨幅。
债券是一种与借贷相关的金融工具，是债务人向投资者发行的一种债务凭证。
债券代表了投资者借出资金给债务人，并以债务人的承诺作为回报。
债券通常以面值发行，债券的回报是以利息的形式支付给债券持有人。
债券还具备在到期日之前偿还本金的承诺。
二、投资方式股票投资是直接投资企业的股权，投资者购买股票后成为公司的股东，参与公司的经营和决策。
股票投资的回报主要包括分红和股票价格的上涨。
股票市场具有较高的风险和不确定性，投资者需要了解和分析公司的财务状况、经营策略等因素，并承担股票投资带来的风险。
债券投资是债务人向投资者借款，债券投资者成为债权人，享受债务人支付的利息和到期偿还债务的权益。
债券投资相对较为稳定，风险较低。
债券市场通常通过信用评级等方式对债券进行风险等级划分，投资者可以选择不同等级的债券投资来满足个人风险偏好和收益要求。
三、风险和回报股票投资具有高风险高回报的特点。
由于股票价格会受到市场供求、公司业绩等多种因素的影响，股票投资的回报具有较大的不确定性。
投资者购买股票时，需要承担股票价格波动带来的风险，但同时也有可能获得较高的收益。
债券投资的风险相对较低，回报相对稳定。
债券投资者在购买债券时，可以根据债券的信用评级和债务人的还款能力来评估风险水平。
一般情况下，信用评级较高的债券具有较低的违约风险，但相应的回报也较低。
四、市场流动性股票市场具有较强的流动性，投资者可以随时买入和卖出股票。
债券与股票的定价策略
Valuation of Bonds and Stock
• First Principles:
– Value of financial securities = PV of expected future cash flows
• To value bonds and stocks we need to:
presented by the security.
5.1 Definition and Example of a Bond
• A bond is a legally binding agreement between a borrower and a lender:
– Specifies the principal amount of the loan.
–
Since the coupon rate is 6 3/8 the payment is
$31.875.
–
On January 1, 2002 the size and timing of cash
flows are:
5.2 How to Value Bonds
• Identify the size and timing of cash flows. • Discount at the correct discount rate.
• To value a Differential Growth Stock, we need to:
–
Estimate future dividends in the foreseeable
future.
–
Estimate the future stock price when the stock
债券与股票的区别英语作文
As a high school student with a keen interest in finance, Ive always been fascinated by the dynamics of the stock market and the world of investments. One of the topics that intrigued me the most is the difference between bonds and stocks. These two financial instruments are the backbone of many investment portfolios, yet they operate on fundamentally different principles.Stocks, also known as equities, represent ownership in a company. When you buy a stock, you become a shareholder, which means you own a small portion of that company. You are entitled to a portion of the companys profits, usually in the form of dividends, and you have a say in how the company is run, typically through voting rights at annual meetings. Stocks are generally considered riskier than bonds because their value can fluctuate dramatically based on the companys performance and market conditions. However, they also offer the potential for higher returns, making them an attractive option for investors willing to take on more risk.On the other hand, bonds are debt instruments. When you purchase a bond, you are essentially lending money to an entity, which can be a corporation, a municipality, or even a government. In return for this loan, the issuer promises to pay you periodic interest, known as the coupon, over the life of the bond and to repay the principal amount when the bond reaches its maturity date. Bonds are generally considered less risky than stocks because they provide a steady stream of income and the repayment of principal is guaranteed, assuming the issuer does not default.The difference in risk and reward between bonds and stocks is a crucialfactor for investors to consider. For instance, during my schools investment club, we analyzed the performance of various stocks and bonds over the past decade. We found that while some stocks delivered exceptional returns, others significantly underperformed, reflecting the high volatility inherent in the stock market. In contrast, bonds provided more predictable returns, with the average annual yield remaining relatively stable.Another aspect that sets bonds and stocks apart is their reaction to economic conditions. Stocks tend to perform well during periods of economic growth, as companies increase their profits and investors are willing to pay more for each share of ownership. Conversely, bonds often shine during economic downturns, as investors seek the safety of fixedincome investments and the assurance of principal repayment.A personal anecdote that illustrates this point is my experience with a small investment I made a few years ago. I decided to split my savings between a tech companys stock and a government bond. Over the next couple of years, the tech stocks value skyrocketed, far outpacing the modest but steady returns from the bond. However, when the market experienced a sudden downturn, the value of my stock plummeted, while the bond continued to provide its regular interest payments.In terms of liquidity, stocks generally offer higher liquidity since they are traded on exchanges and can be bought or sold throughout the trading day. Bonds, particularly those issued by smaller entities, may not be as liquid, which can make it more difficult to sell them quickly without incurring a loss.Diversification is another key concept in investing, and understanding the differences between bonds and stocks is essential for creating a balanced portfolio. By allocating a portion of my investment to both stocks and bonds, I can potentially reduce the overall risk of my portfolio while still participating in the growth opportunities offered by the stock market.In conclusion, while both bonds and stocks serve as important investment vehicles, they cater to different risk appetites and financial goals. As a young investor, understanding these distinctions has been invaluable in shaping my investment strategy and making informed decisions about where to allocate my resources. Whether its the potential high returns of stocks or the steady income and principal security of bonds, each has its unique place in an investors journey towards financial growth.。
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Example 2
• Suppose TB Pirates, Inc. is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year and the required return is 20%, what is the price?
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Example II
• What is the price expected to be in year 4? • What is the implied return given the change in price during the four year period?
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Nonconstant Growth Problem Statement
• Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that dividends will increase at a rate of 5% per year indefinitely. If the last dividend was $1 and the required return is 20%, what is the price of the stock?
Valuing a Discount Bond with Annual Coupons
• Consider a bond with a coupon rate of 10% and annual coupons. The par value is $1000 and the bond has 5 years to maturity. The yield to maturity is 11%. What is the value of the bond?
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YTM with Annual Coupons
• Consider a bond with a 10% annual coupon rate, 15 years to maturity and a par value of $1000. The current price is $928.09.
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Example
• Suppose a firm’s stock is selling for $10.50. They just paid a $1 dividend and dividends are expected to grow at 5% per year. What is the required return? • What is the dividend yield? • What is the capital gains yield?
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Example
• A taxable bond has a yield of 8% and a municipal bond has a yield of 6%
• If you are in a 40% tax bracket, which bond do you prefer? • At what tax rate would you be indifferent between the two bonds?
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Valuing a Premium Bond with Coupons
• Suppose you are looking at a bond that has a 10% annual coupon and a face value of $1000. There are 20 years to maturity and the yield to maturity is 8%. What is the price of this bond?
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Example I
• Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. • What is the current price?
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YTM with Semiannual Coupons
• Suppose a bond with a 10% coupon rate and semiannual coupons, has a face value of $1000, 20 years to maturity and is selling for $1197.93.
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Example
• If we require a 10% real return and we expect inflation to be 8%, what is the nominal rate?
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Example 1
• Suppose Big D, Inc. just paid a dividend of $0.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for?
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