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Tell me something about valuation of a bond?
Bond valuation has one fundamental principle. This principle is that the bond has a value that is equal to the present value of the expected cash flow that will occur in the future.
When the interest rate on a bond and its yield to maturity are equal the bond will trade at par value?
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Is the issue price of bonds equal to the present value of the principal plus the present value of the interest?
The price of bonds are not equal to the present value and principal upon purchase. The interest is accrued over a certain time period, then collected.
Why do bond prices and yields vary inversely?
Bonds are valued by discounting the coupon payments and the final repayment by the yield to maturity on comparable bonds. The bond payments discounted at the bond’s yield to maturity equal the bond price. You may also start with the bond price and ask what interest rate the bond offers. This interest rate that equates the present value of bond payments to the bond price is the yield to maturity. Because present values are lower when discount rates are higher, price and yield to maturity vary inversely.
Can a Present Value Calculator be used to compare mortgage rates?
Yes, you can campare mortgage rates using the present value calculator. you can also check compound interest, present value, return rate / CAGR, annuity, present value of annuity, bond yield and retirement.
Which of the following factors will change when interest rates change?
The present value of a bond's payment
When bonds are sold for more than face value carrying value is equal to?
When bonds are sold for more than face value, the carrying value is equal to the face value plus any premium. The premium is the excess amount paid by the investors over the face value of the bond and is amortized over the life of the bond.
How is Modified Duration calculated for a Zero Coupon Bond?
3 years zero coupon bond. face value $100 and present market value $75. What will be its Macualay Duration and Modified Duration?
How is the IRR on a project related to the YTM on a bond?
The IRR on a project is calculated in the same way the YTM on a bond is. Both methods discount the future cash flows of the investment back to the present value and compare them with the appropriate amount; in the case of a bond, it is its current market price while in the case of the IRR method it is zero. The internal rate of return and the yield to maturity are the discount rates that make the present value of expected cash flows equal to the left side of the equation.
Are the two parts in a double bond of equal strength?
No because if you look up the value of a C-C bond and double it you'll find that it is more than the value of a C=C double bond. Therefore they can't be the same strength.
What is the present value of a 30 year 100 dollar bond which provides fixed semiannual interest payments when the effective rate is 12 percent and the bonds stated rate is 7 percent?
Coupon payment = (100)(.035) = 3.5 PV coupon payments payments = $56.56 PV of bond = 3.34 Present value of bond = 56.56 + 3.34 = $59.90
What type of bond present in a water molecule?
COVALENT bond is present in water
