Bonds Flashcards

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1
Q

Present Value

A

how much should a bond be worth today when a guaranteed sum of money will be given on a specific date in the future.

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2
Q

What is the Present Value of a 1000$ bond with a 5% discount rate maturing in 1 year?

A

PV = 1000/1.05

952.38

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3
Q

What is the FV of 1000 dollars invested today at 5% interest rate for 5 years?

A

1,276.28

FV = PV (1 + i)r

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