Bond Valuations techniques are introduced – A bond is a debt security

Bond Valuations techniques are introduced
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– A bond is a debt security, like ‘IOU.’
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– The bond issuers borrow from the Bond Investors.
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– The issuers agree to repay the principal amount of the loan on the maturity date.
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– Thus, a bond represents loans from the holder to the issuer.
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Discuss at least 5 of the following with numerical examples:
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– What are the features of a zero-coupon bond?
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– Explain the concept of Zero Coupon bond yields and its pricing behavior
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– What are the features of a coupon bonds?
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– Explain the concept of Coupon bond yields and its pricing behavior
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– Discuss the ‘Term Structure of Interest Rates’ and how it related to the Yield Curve
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– What are the different shapes of the yield curve
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– What are the determinants of the shape of the yield curve
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– What does it mean when a bond sells at a premium or when it sells at a discount?
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– Discuss the relation between a corporate bond’s expected return and the yield to maturity; define default risk and explain how these rates incorporate default risk.
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– Assess the creditworthiness of a corporate bond using its bond rating; define default risk