Search results
Results from the WOW.Com Content Network
Bond valuation is the process by which an investor arrives at an estimate of the theoretical fair value, or intrinsic worth, of a bond.As with any security or capital investment, the theoretical fair value of a bond is the present value of the stream of cash flows it is expected to generate.
The bonds are purchased from the market at $985.50. Given that $2.00 pays the accrued interest, the remainder ($983.50) represents the underlying value of the bonds. The following table illustrates the values of these terms. The market convention for corporate bond prices assigns a quoted (clean price) of $983.50.
Pull to Par is the effect in which the price of a bond converges to par value as time passes. At maturity the price of a debt instrument in good standing should equal its par (or face value). [1] Another name for this effect is reduction of maturity. It results from the difference between market interest rate and the nominal yield on the bond.
Interest payments are the primary way bonds generate returns for investors.
The intercept is the nominal risk-free rate available for the market, while the slope is the market premium, E(R m)− R f. The security market line can be regarded as representing a single-factor model of the asset price, where β is the exposure to changes in the value of the Market. The equation of the SML is thus: : = + (()).
The bond market (also debt market or credit market) is a financial market in which participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on for public and private expenditures. The bond market has ...
Absolute value models ("Intrinsic valuation") that determine the present value of an asset's expected future cash flows. These models take two general forms: multi-period models such as discounted cash flow models, or single-period models such as the Gordon model (which, in fact, often "telescope" the former). These models rely on mathematics ...
Get AOL Mail for FREE! Manage your email like never before with travel, photo & document views. Personalize your inbox with themes & tabs. You've Got Mail!