Examlex

Solved

When Determining the Value of a Bond Using Present Value,what

question 37

Essay

When determining the value of a bond using present value,what are the two components used in the calculation?


Definitions:

Effective Interest Method

A method of calculating the amortized cost of a bond and of allocating interest income over the bond's life, reflecting the constant rate of interest over the period.

Bond Discounts

The divergence between the stated value of a bond and its decreased sale price.

Bond Premiums

The amount by which the market price of a bond exceeds its face value, often due to interest rates falling after the bond issuance.

Bond Indenture

A legal contract outlining the terms and conditions under which a bond is issued, including the interest rate and maturity date.

Related Questions