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What is a bond? What are some features of a bond? How do you value bonds? What factors can affect that value?
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- How do interest rates affect bond valuations? What are the key assumptions in valuing a bond?What is interest rate risk, and how does it relate to callable bonds? Explain using an example of your own choosing.How does collateral affect the interest rate on a bond? How does subordination affect the interest rate on a bond too? What else might affect the interest rate on a bond?
- What role do interest rates have in the value of bonds? What are the fundamental assumptions that go into valuing a bond?What impact do interest rates have on bond prices? What are the key assumptions that go into determining the value of a bond?What is the link between the price of a bond and the rate of interest? Describe the origins of this connection in your own words. How can we utilize this connection to calculate the bond's value?