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TIME VALUE of MONEY (VOCABULARY (DISCOUNT RATE
Used to discount future…
TIME VALUE of MONEY
VOCABULARY
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COST of CAPITAL
cost of raising money from investors (debt, equity)
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THEORY
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Bank's interest rate
:arrow_down:Low interest -> :red_cross:poor economy -> stimulate to spend more and borrow money for cheap
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:end:BOND
- Coupon bond: like an annuity
- Zero-coupon bond: only one payment at the end
- Face value/Principal/Maturity/Par (F)
- coupon rate (at par=interest rate)
- priced at premium: coupon rate>interest
- priced at discount: coupon rate<interest
- APR
- EAR