首页 | 学习中心 | 注册 登录
返回列表 发帖
bcp901

Rank: 2

UID
223387 
帖子
232 
主题
62 
注册时间
2011-7-11 
最后登录
2014-8-7 
1# 跳转到 » 倒序看帖
打印
tT
发表于 2013-4-3 07:13 | 只看该作者

simple question- FRA

investment, question, increase, interest, simple
im forgetting this from L1
investments in financial assets
why would interest income increase when the par value is more than historical cost for investment in debt securities?
收藏 分享

maratikus

Rank: 2

UID
223355 
帖子
249 
主题
39 
注册时间
2011-7-11 
最后登录
2013-8-23 
2#
发表于 2013-4-3 07:16 | 只看该作者
im referring to Reading 21; Q17

TOP

economicz

Rank: 2

UID
223395 
帖子
345 
主题
9 
注册时间
2011-7-11 
最后登录
2016-4-19 
3#
发表于 2013-4-3 07:19 | 只看该作者
par  Historical Cost of investment
1000  900
So am I right in saying it is a discount Bond.
This means YTM
YTM=5%, Coupon=6%
Par * Coupon = 60 (1000 * .06)
Face * YTM = 900 * .05 = 45
Amortization of Bond Discount = 60 - 45 = 15 Next Period Investment Cost = 900 + 25 = 915

TOP

zbird2134

Rank: 2

UID
223368 
帖子
251 
主题
45 
注册时间
2011-7-11 
最后登录
2014-7-21 
4#
发表于 2013-4-3 07:22 | 只看该作者
so the amortization of a discount bond gets added to the interest income under the effective interest method?
so how about the premium bond? it reduces the interest income and thus the net income?
by the way for discount bond: YTM is greater than coupon rate.

TOP

spartanag07

Rank: 2

UID
223299 
帖子
278 
主题
135 
注册时间
2011-7-11 
最后登录
2013-8-23 
5#
发表于 2013-4-3 07:26 | 只看该作者
thanks sumz… always get confused….
And I think I have messed up in relation to the directional stuff as well.
right, what I have written in terms of the interest rates is related to a premium bond.
In a discount bond - YTM would be 7%, Coupon 6%, e.g.
PAR * Coupon = 1000 * 6% = 60
Face * Coupon = 900 * 7% = 63
And 3$ would be the Bond Discount Amortization. (which gets added to Interest income).
For a premium Bond:
Face=1100, Par=1000
YTM=5%, Coupon=6%
Par * Coupon= 60
Face* YTM=55
Subtract 5$ as Bond Premium Amortization (reduces Interest Income).

TOP

返回列表