The value of any bond should be the present value of all the coupon receipts as
ID: 2754787 • Letter: T
Question
The value of any bond should be
the present value of all the coupon receipts as well as the principal (par value) repayment at the bond’s maturity.
the future value of all the coupon receipts as well as the principal (par value) repayment at the bond’s maturity.
the sum total of all the coupon receipts as well as the principal (par value) repayment at the bond’s maturity.
none of the above
a.the present value of all the coupon receipts as well as the principal (par value) repayment at the bond’s maturity.
b.the future value of all the coupon receipts as well as the principal (par value) repayment at the bond’s maturity.
c.the sum total of all the coupon receipts as well as the principal (par value) repayment at the bond’s maturity.
d.none of the above
Explanation / Answer
The correct answer is option A.
Value of the bond is the sum of the present value of the coupon receipts and the present value of the value of the bond at maturity.
All the coupon receipts are calculated with the discount rate to get the present vlaue of the coupon paymnets and the present value of the maturity value.
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