Master the Art of Bond Valuation
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Questions and Answers

Which of the following best describes bond valuation?

  • The process of estimating the intrinsic worth of a bond (correct)
  • The process of determining the market price of a bond
  • The process of calculating the yield of a bond
  • The process of determining the coupon rate of a bond

    • What is the theoretical fair value of a bond based on?

  • The maturity date of the bond
  • The coupon rate of the bond
  • The market price of similar bonds
  • The expected cash flows of the bond (correct)

    • How is the value of a bond calculated?

  • By adding the bond's expected cash flows to the discount rate
  • By discounting the bond's expected cash flows to the present (correct)
  • By discounting the bond's expected cash flows to the future
  • By multiplying the bond's expected cash flows by the discount rate

    • What does it mean if a bond is selling at a discount?

    <p>The market price of the bond is less than its par value</p> Signup and view all the answers

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