Int. Rates + Bond Valuation Flashcards
1
Q
What is a bond?
A
A bond is a legally binding agreement between a borrower and lender that specifies the
°Par Val
°Coupon Rate
°Maturity date
°Coupon Payment
The YTM is the required market interest rate on the bond
2
Q
Primary principle of Bond Valuation
A
Value of financial securities= PV of Expected Future Cash Flows
Therefore determined by the PV of the coupon payments + pv par value
3
Q
A
4
Q
A
