The Present Value of $3,000 to Be Received in 5

question 69

True/False

The present value of $3,000 to be received in 5 years at a 10% discount rate is $2000.

---

Definitions:

Convexity

This is a measure of the curvature or the degree of the curve in the relationship between bond prices and bond yields, indicating how the duration of a bond changes as the interest rate changes.

Bond Price

The amount of money an investor pays to purchase a bond and can fluctuate based on interest rates, credit quality, and other factors.

Coupon Rates

The annual interest rate paid by bond issuers to the bondholders, usually fixed throughout the life of the bond.

Price Volatility

A statistical measure of the dispersion of returns for a given security or market index, indicating how much and how quickly the value of an asset changes.