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The issuance price of a bond does not depend on the 1. face value of the bond 2. riskiness of the bond 3 method used to amortize the bond discount or premium 4 effective interest rate?
Wiki User
∙ 14y ago
The issuance price will not depend on: 3. Method used to amortize the bond discount or premium When issuers estimate an offer price, they need to estimate the risk premium over the riskless securities, in percentage points, assess the effective interest rate for the given maturity, and assume a face value, usually 1,000. These values have to be plugged in the formula based on Time Value of money. They don't need to worry about how a purchaser will amortize the premium or accrue the discount, which is done for tax purposes.
Wiki User
∙ 14y ago
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What is the noun from interest?
The word 'interest' is both a verb and a noun.The noun 'interest' is a word for a desire to know or learn; a right, title, or legal share of something; a charge for borrowed money or the profit made on invested capital; a word for a thing.Examples:There is a lot of interest in our new product. (noun)This account pays very little interest. (noun)I have some books that should interest you. (verb)
What is the maths formula for compound interest?
principal - Pinterest - Irate % - Rtime - Tamount -ATHE FORMULA FOR CALCULATING INTERESTI = P * R* T---------100A = P + IA = P * R* T---------100i.e., A = P[ 1 + RT]--------100FOR COMPOUND INTEREST:C.I = final amount - original principal= amount - principal
How are gene of interest identified and cloned?
The expression of a gene of interest can be ensured by combining it with a gene recessive to it.
How does the frequency of compounding interest impact the growth of savings?
The more times that interest is compounded the more growth of savings.
What are the Publicized points of interest in grasslands?
Grass
When effective interest method is used to amortize bond premium or discount the periodic amortization will be?
increasse if the bonds were issued at either a discount or premium.
Is the straight-line amortization or effective interest rate method better?
This method is preferred over the straight-line method of amortizing bond discount or bond premium. Amortization of a bond discount or premium is the difference between the interest expense and the nominal interest payment. The amortization entry is: Interest Expense (effective interest rate x carrying value) Cash (nominal interest rate x face value) Bond Discount (for the difference)
What is the difference of simple interest and simple discount?
Simple interest refers to interest that is only paid on principal. Simple discount refers to the amount that is deducted from the amount of the loan.
What is difference between bankers discount and true discount?
The Banker's Gain (BG) is the difference between a banker's discount and a true discount. It is a deduction with simple interest.
Accounting treatment of trade discount and cash discount?
Trade Discount are considered cost of sales/reduction in sales dependant upon who the customer is. Cash Discount is always considered Increasing Interest Expense/Reduction of Interest Expense, dependant upon who the recipient is.
What does effective interest rate mean?
An effective annual interest rate considers compounding. When the principle is compounded multiple times each year the interest rate increased to be more than the stated interest rate. The increased interest rate is the effective annual interest rate.
When a bonds stated interest rate is less than the market interest rate is the rate at a discount or premium?
When the coupon rate (the contractual periodical "interest" payments) are lower than the yield (the market required return) the bond will be in discount. This discount makes up for the low value of the coupons.
When is normal interest rate lower then effective interest?
Only on Tuesdays.
Which term refers to the rate of interest the Federal Reserve Bank charges member banks?
Discount rate
IF Covered Interest rate Parity says that interest rate differential equal?
forward/discount rate premium
Any premium or discount on a long-term debt investment is amortized?
Yes, at the end of the year you take the difference between the interest revenue gained and what would have been gained if the investment had the present value interest. For a discount, the difference will be credited against the discount received.
Is the interest rate and discount rate in present value?
yes they are the same
