Asked by
Evelyn Williams
on Oct 15, 2024
Verified
The issue price of a bond is equal to the present value of all future cash payments discounted at the bond's market rate.
Issue Price
The price at which new securities are offered to the public by an issuer.
Present Value
Today's value of a future financial sum or series of payments, calculated with a certain return rate.
Market Rate
The current price or interest rate of goods, services, or securities in the marketplace, determined by supply and demand forces.
- Understand the principles of valuing bonds and the relevance of market rate versus contract rate.
Verified Answer
CS
Learning Objectives
- Understand the principles of valuing bonds and the relevance of market rate versus contract rate.