Question

You are a first year analyst at a boutique financial advisory firm. Your supervisor asked you to draft a “note” to (1) describe in detail how to determine the price and return(s) on a bond and (2) provide a detailed numerical example and narrative walking the reader through the principals, frameworks and processes. Your “Note” will be included in an in-house training package given to all incoming analysts. You wish you had access to a package when you joined the firm and you are excited to help your new colleagues. You also are excited to serve as a trainer.

Answer 1

MEANING OF BOND:-

Bond is a type of security in which people invest. Bond is a type of loan taken by the receiver of bond, company which needs of capital issue bonds for the need of capital . Company issue bonds to public for capital.

TO DETERMINE THE PRICE OF BOND:-

Price of bonds are not fixed it depends on the demands of capital or money etc. When the demand of money increases , needer issue bonds in the dacf value.

TO DETERMINE THE RETURN ON BONDS :-

Prices of bonds are easily depend on the demands and need of money but the return is totally depend on the risks, higher the risks and higher the ratings it will reduce the amount of return and vice-versa.