Posted on

The theory behind the bond’s price

Bonds that have the same risk and age will have the same returns as the basis for calculating the bond price (independent of the coupon rate). If the price of a single bond is known, then its YTM can be calculated and YTM is used to calculate the price of the second bond. The concept of calculating the price of an asset based on the price of similar assets can be used to calculate the value of other assets (excluding bonds). Aside from that, if you wish to have a team of professionals to back you up for this kind of investment, perhaps the best bail bonds ft Lauderdale can be the good one for you to hire.

Difference between Debt and Equity

Debt:

– Has no interest in ownership of shares.
– The creditor has no voting rights.
– Interest is a cost to run a business and can reduce the amount of tax paid.
– The creditor has a legal right when interest and principal payments fail to be implemented.
– Excess debt can lead to financial problems and bankruptcy.

Equity:

– Has the interest in ownership of shares.
– Shareholders have the voting rights to elect the board of directors and other issues.
– Dividends are not a cost to run a business and can not reduce taxes.
– The dividend is not an obligation of the company, shareholders have no legal right when dividends are not paid.
– Firms whose source of funding is entirely from shareholders cannot go bankrupt because the company has no debt.

While there is also the Obligation Contract (Bond Indenture), which has these characteristics:

Is a contract between the company and the bondholder covering:
– The base clause (terminal) of the bond
– The amount of bond value issued
– Description of the property used as collateral (if any)
– Reserve fund for bond repayment
– Provision for early redemption of bonds
– Details of the protection agreement for bondholders