Learn Yourself Tutorial on Bond Valuation by AccountingExpert


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									Bond Valuation


Coupon Rate

Current Yield

Yield to Maturity

Bond Price: Concept

Bond Price: Example

Discount, Par or Premium

Bond Price and Time till Maturity

Capital is the long term cash requirement of a business which is normally raised either from the owners or
borrowed from lenders. The borrowing is normally in the form of bonds which are long-term debt
instrument indicating that a business has borrowed a certain amount of money and promises to repay it in
the future under clearly defined terms. The legal document that specifies the terms of the bonds is called
bond indenture.

The business pays the lenders interest in the form of periodic payments called coupons. In this
connection, there is a predefined interest rate called coupon interest rate which is the percentage of a
bond’s par value that will be paid annually.

Certain important parame
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