Course: Introduction to Finance, Section: Chapter 7

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General
- Announcements Forum
  WELCOME_OBA3105_INTRODUCTION TO FINANCE_BBAIB_ODL
  
  This is Introduction to Finance OBA 3105, a core subject in Bachelor of Business Administration in International Business (BBAIB)_ODL
  
  DESCRIPTION OF THE COURSE
  
  This module is designed to provide students with a strong foundation in finance that allows them to understand and apply the concepts in the world of finance as well as to focus their attention to certain issues they can further explore. which applicable for both in personal and managerial finance. At the end of the course, students can recognize relationship between finance and other business disciplines, as well as to be able to use synergy of those disciplines in decision making.
  
  AIM OF THE COURSE
  The overall aim of the module is to give students an exposure to the basic business finance theory both quantitative and qualitative with some simple applications.
  Specific topics covered will include time value of money, the role of the financial markets in company financing, the nature and role of financial instruments, sources of financial information, evaluation of proposed capital expenditure, and cost of capital and the returns to providers of finance.
  This is an introduction to the fundamental concepts of business finance. The students will be exposed to the time value of money concept, the assets evaluation, the capital budgeting, the capital structure, and the cost of capital, and working capital management.
  COURSE LEARNING OUTCOME
  At the end of the course the students will be able to:
  Discuss the principles of finance and the roles of financial market that underline the finance discipline.(C2, PLO1)
  Demonstrate the concept of time value of money and various decision making techniques in financial planning. (C3,PLO8)
  Calculate the value of bonds and stock in a market place (C3,PLO8)
  SUPPORT AND CONTACT DETAILS
  Name: Mimi Suriaty Binti Haji Abdul Rani
  Email : msuriaty@nilai.edu.my
  Consultation Hours: Wednesday (08:00 am – 10:00 am) and Thursday (08:00 am – 10:00 am

Chapter 7 – Bond Valuations_Part 1
CHAPTER 7 : BOND VALUATION
WEEK 10 (Lecture) and (Tutorial)
SYNOPSIS / OVERVIEW
Chapter 7 and 8 cover the basics of fixed income analysis. The main topics covered are features of fixed income securities and overview of bond sectors and instruments, risks associated with investing in bonds to include interest rate risk and credit risk, introduction to the valuation of fixed income securities to include valuing mortgage-backed and asset-backed securities and bonds with embedded options.
Here are the main topics to be covered in Chapter 8 (Week 10):
- Bonds and Bond Valuation
- More on Bond Features
- Bond Ratings
- Some Different Types of Bonds
- Bond Markets
- Inflation and Interest Rates
- Determinants of Bond Yields
LEARNING OUTCOMES
By the end of this lesson, student should be able to:
- Identify the important bond features and bond types.
- Calculate bond values and why they fluctuate.
REQUIRED READINGS
Chapter 8: Bond Valuation
Brigham E. and Houston J. Fundamentals of Financial Management. 14th ed., South-Western College Pub., 2016.
Chapter 6: Debt Instruments
Titman, Keown, A. J. and Martin, J.D. (2018). Financial Management, (13th ed). Principles and Applications, Pearson Education.
- OBA3105_INTRODUCTION TO FINANCE_VIDEO 7_CHAPTER 7_PART 1 AND 2 File
  CHAPTER 7 : BOND VALUATION
- SELF CHECK 7.1 : Online Discussion Forum
  
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  Once completed view the video. Let's discuss!
  Tutorial (6) _Bond Valuations.
  ▪ Details: 10 questions
  ▪ Duration of submission: 1 week
  
  Question 1 :
  
  Consider a bond issued ten years ago with an at – issue time to maturity of 30 years. The bond’s coupon rate is 8 percent, and it currently trades in the bond market for 109 percent. Assuming a par value of $1000, what is the bond’s current time to maturity, semiannual interest payment and bond price in dollars?
  
  Question 2 :
  
  ABX Industrial Products' bonds have a 7.60 percent coupon and pay interest annually. The face value is $1,000 and the current market price is $1,062.50 per bond. The bonds mature in 16 years. What is the yield to maturity?
  
  Question 3 :
  
  The bonds issued by Stainless Tubs bear a 6 percent coupon, payable semiannually. The bonds mature in 11 years and have a $1,000 face value. Currently, the bonds sell for $989. What is the yield to maturity?
  
  Question 4 :
  
  Petron Oil Supply offers 7.5 percent coupon bonds with semiannual payments and a yield to maturity of 7.68 percent. The bonds mature in 6 years. What is the market price per bond if the face value is $1,000?
  
  Question 5 :
  
  Great Com. has a 6.75 percent coupon bond outstanding that matures in 10.5 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 6.69 percent?
  
  Question 6 :
  
  MyIP Properties offers a 9.5 percent coupon bond with annual payments. The yield to maturity is 11.2 percent and the maturity date is 11 years from today. What is the market price of this bond if the face value is $1,000?
  
  Question 7 :
  
  What is the price of the following bond?
  
  Face value: $1,000
  Maturity: 10 years
  Coupon rate: 8%
  Discount rate: 9%
  
  Question 8 :
  
  What is the price of the following bond?
  
  Face value: $1,000
  Maturity: 50 years
  Coupon rate: 10%
  Discount rate: 12%
  
  Question 9 :
  
  What is the value of the following semi-annual bond?
  
  Face value: $1,000
  Maturity: 10 years
  Coupon rate: 10%
  Discount rate: 9%
  
  Question 10 :
  
  What is the value of the following semi-annual bond?
  
  Face value: $1,000
  Maturity: 9.5 years
  Coupon rate: 7%
  Discount rate: 7%

General

Chapter 7 – Bond Valuations_Part 1

Chapter 7 – Bond Valuations_Part 1

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