Identify the variables that are required to calculate the value of a bond. More than one answer may be correct. Multiple select question. The market interest rate The time to maturity of the bond The coupon rate of the bond The bond's S&P rating The original issue price of the bond

Identify the variables that are required to calculate the value of a bond. More than one answer may be correct. Multiple select question. The market interest rate The time to maturity of the bond The coupon rate of the bond The bond's S&P rating The original issue price of the bond

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6LO

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Question

Identify the variables that are required to calculate the value of a bond. More than one answer may be correct.

Multiple select question.

The market interest rate

The time to maturity of the bond

The coupon rate of the bond

The bond's S&P rating

The original issue price of the bond

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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