MGMT 20000 Lecture Notes - Lecture 22: Interest Rate, Relative Risk
30 Mar 2019
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Document Summary
Investment community values a term bond at the present value of its expected future cash flows using a market interest rate. Pv of the future principle payment at maturity. At maturity bonds are redeemed at the face (principle) amount of the bond issue. The future amount needs to be stated at the value today using a market interest rate. Use table 2 (p-2) the present value of . It is used to calculate the present value of any single amount. Interest on bonds are paid in equal semiannual amounts. The series of cash payments need to be stated at the value today using a market interest rate. Use table 4 (p-4) the present value of an ordinary annuity of . It is used to calculate the present value of any series of equal payments. Accounting valuation for bonds at date of issuance. Issuance and marketing of bonds to the public. Selling price of a bond issue is set by the.
