1Bond
a security that obligates the issuer to make specified payments to the holder over a period of time.
2Par Value/Face Value
the payment to the bondholder at the maturity of the bond.
3Coupon Rate
a bond's annual interest payment per dollar of par value.
4Maturity
bonds are typically issued with these up to 30 years.
however, there can these can range from 50-100 years.
5Callable Bond
bonds that may be repurchased by the issuer at a specified call price during the call period.
6Convertible Bond
a bond with an option allowing the bondholder to exchange the bond for a specified number of shares of common stock in the firm.
7Yield to Maturity
the discount rate that makes the present value of a bond's payment equal to its price.
8Current Yield
annual coupon divided by bond price.
9Premium Bonds
bonds seeling above par value
10Discount Bonds
bonds selling below par value.
11Investment Grade Bond
a bond rated BBB and above by Standard & Poor's or Baa and above by Moody's.
12Speculative Grade or Junk Bond
a bond rated BB or lower by Standard & Poor's or Baa and below by Moody's.
13Collateral
a specific asset pledged against possible default on a bond.
14Debenture
a bond not backed by specific collateral.
15Yield Curve
a graph of yield to maturity as a function of term to maturity.
16Book Value
the net worth of common equity according to a firm's balance sheet.
17Liquidation Value
net amount that can be realized by selling the assets of a firm and paying off the debt.
18Intrinsic Value
the present value of a firm's expected future net cash flows discounted by the required rate of return.
19Dividend Discount Model (DDM)
a formula stating that the intrinsic value of a firm equals the present value of all expected future dividends.
20Discounted Cash Flow (DCF) valuation
financial valuation method used to estimate the value of an investment, project, or company based on its expected future cash flows.
21Constant Growth Model
a form of the dividend discount model that assumes dividends will grow at a constant rate.
22Dividend Payout Ratio
fraction of earnings paid out as dividends
23Price-Earnings Multiple (PE Ratio)
the ratio of a stock's price to its earnings per share.
24Price to Book Multiple
financial metric that compares a company's market price to its book value, essentially showing how much investors are paying for each dollar of net assets. calculate by
P/B = Market Price per share/Book Value per share
25Price to Sales (when would you use this)
is a valuation metric that compares a company's stock price to its revenues per share. Calculated by
P/S Ratio= Market Cap/ Total Sales (Revenue)
when to use- for companies with low or negative earnings, early-stage or growth companies, industries with varying profit margins, assessing market sentiment.
26PEG Ratio
Ratio of P/E multiple to earnings growth rate.