China's Corporate Bond Pricing

Accompanying the development and the specialization of our domestic financial market in recent years, the development of the corporate bond market has been thrown into sharp relief. As one method of the corporate direct financing, the corporate bond market calls for instant development. Hence, it is imperative that we begin the research of this market. Since the real scope of such research is quite broad, this paper chooses just one aspect in order to make the research target more specific, and that is to make a research on the pricing of domestic corporation bonds. No matter what kind of financial product, the pricing of it plays a pivotal role in the decision made by both of investor and fund raiser, because the result of pricing is directly linked with their financing costs, and that is why the pricing aspect is chosen. After confirming the research direction, the various factors that influence the price of corporation bonds are discussed, and an empirical analysis of the domestic corporation bond pricing is made hoping that the key factors in determining the corporation bond price can be revealed. Finally, based on the research results, several opinions and proposals are recommended.The cash flow discount method is the most basic pricing principal among the varied financial asset pricing measures, and the main ideas of this method is that: firstly, the cash flow of the financial asset should be estimated, and the proper discount rate should be chosen; secondly, the assessed cash flow is discounted with the chosen interest rate, and the results are added together to get the theoretical price of the financial asset. Through the analysis, considering the difficulty of forecasting the expected cash flow, and the real situation of the domestic corporation bonds, the object of the research is finally decided to be normal corporation bonds without embed option. Thus, the research of pricing...