The First Step in Finding the Value of a Bond

question 87

Multiple Choice

The first step in finding the value of a bond is to

• A) discount back the cash flows using an interest rate that represents the yield available on other bonds of like risk and maturity.
• B) identify the cash flows the holder of the bond will receive.
• C) contact the holder of the bond.
• D) none of the above.

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Definitions:

Equitable Agency

A principle where an agent has the authority to act on behalf of a principal, based on fairness and justice.

General Power of Attorney

A legal document granting someone authority to act on another person's behalf in a variety of matters.

Legal Documents

Written instruments that formalize agreements, rights, or obligations legally enforceable by law, such as contracts, wills, and deeds.

Specific Purpose

A clear, defined goal or objective intended for a particular project or plan.