Debt Valuation Methods and Yields Quiz
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Questions and Answers

Which method is generally used when pricing debt securities?

  • Future value
  • Internal rate of return
  • Discounted cash flow
  • Present value (correct)

    • Which two assumptions combine to form the investor's required yield to maturity?

  • Discount rate and market price
  • Market price and investor's risk tolerance
  • Probability of receiving each payment and market price
  • Probability of receiving each payment and discount rate (correct)

    • What does the yield to maturity determine in the debt sector?

  • The probability of receiving each payment
  • The investor's risk tolerance
  • The price an investor is willing to trade the debt security (correct)
  • The present value of future cash flows

    • What is an alternative way of expressing the market price?

    <p>Yield to maturity</p> Signup and view all the answers

    What does the valuation discussion in the debt sector focus on?

    <p>The present value of future cash flows</p> Signup and view all the answers

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