Respuesta :
A $43,000 face value bond will mature in 75 days and has a bank discount yield of 2.35%. The current value of the bond is $42,789.48
Current value of bond = Face value [1 - (Days until maturity/360 × Bank
discount yield)]
Current value of bond = $43,000 [1 - (75/360 × 0.0235)]
Current value of bond = $42,789.48
- Bond valuation is a method of figuring out the hypothetical fair value (or par value) of a specific bond.
- It entails figuring out the bond's face value, or expected value at maturity, as well as the present value of expected future coupon payments, or cash flow.
- Bond valuation enables investors to determine what rate of return would make a bond investment profitable since a bond's par value and interest payments are fixed.
- In the form of coupon payments, a bond is a debt instrument that offers a consistent income stream to the investor. The entire face value of the bond is paid back to the bondholder at the maturity date.
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