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Lecture 10

Lecture 10

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Engineering Economics 390. Courtesy of Atre, Sundar V Associate Professor, Oregon State University.
Engineering Economics 390. Courtesy of Atre, Sundar V Associate Professor, Oregon State University.

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01/01/2013

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ENGR 390 Lecture 10 BondsWinter 2007S.V. Atre1
Chapter 6Principles of Investing
Investing in FinancialAssets
Investing in Stocks
Investing in Bond
Investment Strategies
Investment Basics
LiquidityHow accessibleis yourmoney?
RiskWhat is the safetyinvolved?
ReturnHow much profitwill yoube able to expect from yourinvestment?

ENGR 390 Lecture 10 BondsWinter 2007S.V. Atre2
Investing in Bond
Bonds: Loans thatinvestors make tocorporations andgovernments.
Face (par) value: Principalamount
Coupon rate: yearlyinterest payment
Maturity: the length of theloan
Types of Bonds and How They Are Issued in the Financial Market

ENGR 390 Lecture 10 BondsWinter 2007S.V. Atre3
AT&T 7s05Closing price: 108 1/4\$1,082.50
Coupon rateMaturity date2005No meaning,SpacingMarket price
Bond Price Notation Used in Financial Markets
29/32=\$9.062530/32=\$9.375031/32=\$9.687532/32=\$1013/32=\$4.062514/32=\$4.37515/32=\$4.687516/32=\$5.00
1=\$101/2=\$5.00
25/32=\$7.812526/32=\$8.125027/32=\$8.437528/32=\$8.759/32=\$2.812510/32=\$3.125011/32=\$3.437512/32=\$3.75
7/8=\$8.753/8=\$3.75
21/32=\$6.562522/32=\$6.875023/32=\$7.187524/32=\$7.506/32=\$1.56257/32=\$1.87507/32=\$2.18758/32=\$2.50
3/4=\$7.501/4=\$2.50
17/32=\$5.312518/32=\$5.625019/32=\$5.937520/32=\$6.251/32=\$0.31252/32=\$0.62503/32=\$0.93754/32=\$1.25
5/8=\$6.251/8=\$1.25
Treasury BondsCorporate Bonds