First Listening log 9.14

Business Finance
Professor: Woochan Kim
09.11.07 (2:00~3:30) / 09. 13 (3:00~4:45)
In this week what I learned in the class are valuation of bonds and valuation of stocks.
What I write about is Valuation of bonds which that basically we can divide in 3parts that are rate, present price and yield.
Easy to say the rate is fix at the bonds when they were issued and yield is very flexible in according to market and present price is also changeable as rate’s variation. As times passed holder don’t really care about rate as it is unchangeable. But the thing we consider are present value of bonds, because if rate goes up the value goes down and if rate goes down the value goes up.
Simply we have choices. First, we just hold until maturity and then we can get coupon rate regularly and capital on maturity. It is just easy way to make money but if compared to interest of bank we can’t bet whether investment bond is better or not. Second, we focus on the yield’s change which cause present value of bonds, so we can choose to sell bonds to realize the present earnings when the yield down. This way is basically depends on holder’s inclination and economic situation.
This is very basic part of bonds and we can divide bond into a lot of sorts according to bond’s feature. Also along lots of bonds there are a lot of model and formula but it is too hard to mention. Actually it was difficult to understand totally about bonds even though when I studied bonds in Korea it was very hard. Especially this week the majority of lecture topics were some model and formulas, so frankly I was sleepy and hard to concentrate. Anyway it made me review my study also encouraged in doing my best at finance and English.