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Notes
- 1.
Yield curve is discussed later.
- 2.
Time value tables are available in most Corporate Finance text books
- 3.
Credit rating is discussed later.
- 4.
Duration refers to the weighted average time to maturity of a bond in years. When (a modified version of) duration is multiplied by a change in yield we get approximate change in the bond price. In short, duration is a measure of bond price volatility. Duration is discussed in a subsequent section (and chapter).
- 5.
The option has more value when the firm is highly leveraged than when it is moderately leveraged because the probability of default is low.
- 6.
Interested readers may refer to Anthony Saunders (1999).
- 7.
John Finnerty (1992).
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Vishwanath, S. (2009). An Overview of Fixed Income Securities and Markets. In: Krishnamurti, C., Vishwanath, R. (eds) Investment Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-88802-4_16
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