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someone
What is Bond?
What Are Bonds?
3. If the current interest rate is less than the bond's coupon rate, the bond will sell
above par value or at a "premium."
A bondholder owning a long-term bond is exposed to greater interest rate risk than
when owning a short-term bonds.
What is Valuation?
required return.
Basic Valuation Model
Suppose an investor is considering to purchase
a five year bond of Rs.1,000/- @8% int. The
investors required rate of return is 10%. The
investor will receive cash of Rs.80/- as interest
each year for 5 years and Rs.1,000/- on
maturity. So what is the PV value of bond?