UGBA 102A at University of California--Berkeley


1 Intro to Bonds
This video serves as an introduction and overview as to what bonds are, before we dive in to the good stuff.
2 Discounts and Premiums
Bonds can either be sold for their face value, at a discount, or for a premium. There are two factors that will determine which one it will be: the coupon rate and the market rate.
3 Selling at a Discount
When a bond's coupon rate is less than the market rate, that bond will sell at a discount. We'll figure out how to price a bond in that situation.
4 Selling for a Premium
When a bond's coupon rate is higher than the market rate, that bond is going to sell for a premium. We'll calculate that premium in this video.
5 Amortization
As a bond approaches maturity, its carrying value approaches its face value through a process called amortization. We're going to do two amortization tables so you can see how easy they are.
6 Borrowing Cost
With bonds selling at discounts and premiums, how do we find out what the real cost to borrow actually is? Well, there are two methods and we'll give both a shot.
7 Interacting with Market Rates
As we've seen in several of the other videos, market rates have a big impact on what a bond ends up selling for. What can we learn about market rates based on the prices of bonds?
8 Retiring Bonds
A bond can be taken out of circulation by reaching its maturity date and being paid off, or by the company calling the bond early for a stated price. When the bond is called early, it's possible that we may need to recognize a gain or a loss on that bond.