How do you determine the selling price of a bond? What two pieces of information must...
How do you determine the selling price of a bond? What two pieces of information must be added together to get the selling price?
Homework Answers
The price of the bond is determined using interest rate paid on the bond and interest paid by the market on the same bond. It involves following steps:
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Calculate the interest paid by the bond
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Calculate the present value of the amount to be received on maturity of the bond . In simple words present value of the face value the bond
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Calculate present value of interest payments to be received on the bond in future.
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The price of the bond is the sum of the present value of amount to be received on maturity of the bond and the present value of interest payments to be received on the bond in future
Add Answer to:
How do you determine the selling price of a bond? What two
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