The following tutorial questions serve as practice questions on TVM and Bond Valuation. (Answer Both Questions 1 & 2) 1. Match each sentence to the correct concept. a. The amount an investment is worth after one or more time periods is referred to as _______________ b.The process of finding the present value of some future amount is called _________________. c.Calculating the present value of a future cash flow to determine its value today is known as _________________. d. Interest earned on the principal and may be for a number of years may be called ______________ e. ___________ is the process of accumulating interest in an investment over time to earn more interest. f. The interest earned on both the initial principal and the interest reinvested from prior periods is referred to as ______ _______. 2. A bond matures in 15 years and pays an 8 percent annual coupon. The bond has a face value of $1,000 and currently sells for $985. What is the bond’s current yield and yield to maturity?
The following tutorial questions serve as practice questions on TVM and
1. Match each sentence to the correct concept.
a. The amount an investment is worth after one or more time periods is referred to as _______________
b.The process of finding the
c.Calculating the present value of a future cash flow to determine its value today is known as _________________.
d. Interest earned on the principal and may be for a number of years may be called ______________
e. ___________ is the process of accumulating interest in an investment over time to earn more interest.
f. The interest earned on both the initial principal and the interest reinvested from prior periods is referred to as ______ _______.
2. A bond matures in 15 years and pays an 8 percent annual coupon. The bond has a face value of $1,000 and currently sells for $985. What is the bond’s current yield and yield to maturity?
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