How Should a Long-Term Bond Initially Be Valued

question 67

Multiple Choice

How should a long-term bond initially be valued?

• A) at the future value of the future cash flows
• B) at the present value of the future cash flows
• C) at the present value of the interest to be paid
• D) at the maturity value of the bond

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Definitions:

Growth Rate

The rate at which a company's earnings or revenue increases over a specified period, often used to gauge potential investment performance.

Dividend Payout

Dividend Payout refers to the portion of a company's earnings distributed to shareholders as dividends, representing a return on investment.

Dividend Yield

A financial measurement that illustrates the annual amount a company dispenses in dividends compared to its current stock price.

P/E Ratio

The ratio of a company's share price to its earnings per share, indicating the value the market places on its earnings.