Please enable JavaScript.
Coggle requires JavaScript to display documents.
Debit Securities - Coggle Diagram
Debit Securities
Money Market : The prime role of the money market is the provision of short-term liquidity for the economy.When capital is needed by corporates and governments, it can be obtained quickly,easily and at relatively low cost through short-term borrowing.
-
-
-
-
-
-
The Debt Securities Market (or credit market) is the largest capital market in the world, comprising 55% of global financial assets; over US$163 trillion1 in assets outstanding.
-
-
Both markets are wholesale markets. The buyers and sellers are financial institutions, non-financial institutions, and governments that trade in millions and billions of debt securities.
YMT(Yield To Maturity) ---- =% return on the price paid , that the bond buyer needs to earn, assuming the security is held to maturity = Bond Buyer's required rate of return of the bond.
-
-
CONCLUSION（结论）
-
-
YTM And Coupon Rate
When YTM > Coupon Rate:
The bond buyer requires a yield greater than what the interest earned provides. So, a lower price will be paid than the face value , in order to earn the greater yield. Known as a Discount Bond. (折扣债卷）
When YTM < Coupon Rate:
The Bond Buyer requires a yield smaller than what the interest earned provides. So, a higher price will be paid than the face value, in order to earn the smaller yield.** Known as Premium Bond（溢价债卷）**
When YTM=Coupon Rate:
The bond buyer requires a yield equal to what the interest earned provides. So the the bond price will be the same as the face value. Known as a Par Bond(平价债卷）
YTM and Price
When YTM up , Bond Price Down
The future cash flows of the bond are fixed. Coupon is fixed and the Face value is fixed. For these future cash flows to earn a higher return, a lower price must be paid.
When YTM Down, Bond Price Up
The future cash flows of the bond are fixed. Coupon is fixed and the Face Value is fixed. For these future cash flows to earn a lower return, a lower price must be paid.
Debt Securities can provide the most flexible and cheapst form of finance. It is one of two ways to raise capital. The other being though enquity finance.
Flexible: Very large amounts of capital can be raised quickly and easily for short maturities(days) or long-dated terms(years).
Cost of debt: For an issuer, debt is the cheaper form of finacne compared to raising equity share capital.
Bond Market:Bond investors are paid a periodic coupon, which is a percentage of the face value (coupon rate), over the life of the bond and lastly receive the face value back at maturity.
-
-
