We have seen computation of present value using single discount rate. But the right way to value a cash flow of a bond is to use multiple discount rates, i.e valuing the cash flows of a bond by using different discount rates that are unique to the time period in which a cash flow will be received. 

Posted Date: 9/10/2012 5:47:32 AM | Location : United States

Ask an Expert

Related Discussions:- Valuation using multiple discount rates, Assignment Help, Ask Question on Valuation using multiple discount rates, Get Answer, Expert's Help, Valuation using multiple discount rates Discussions

Write discussion on Valuation using multiple discount rates
Your posts are moderated

Write your message here..

Related Questions

Multiperiod compounding, where you deposit 1000dollars at the end of each y... where you deposit 1000dollars at the end of each year for 4 years, what will be the amount of deposits at the end of each year if it is compounded at 12% semi-annually?

Straight line depreciation, Alger Corp wants to buy some construction equip... Alger Corp wants to buy some construction equipment for $50,000, which has a useful life of 4 years with no salvage value. Alger uses straight-line depreciation. Alger has a tax ra

Explain the term dividend cover, Dividend cover Dividend cover measure... Dividend cover Dividend cover measures the relationship among earnings per share and net dividends per share. The higher the altitude of dividends for any given level of EPS t

Debt ratio, Calculate the sustainable growth rate Calculate the sustainable growth rate

Treasury coupon strips, Observed yield on strips can be used to const... Observed yield on strips can be used to construct an actual spot rate curve, but it is not free from drawbacks. There are some problems with this; first, the liqu

Risk associated with foreign direct investment, Discuss the risk associated... Discuss the risk associated with Foreign Direct Investment. How do these risks differ from those encountered in domestic investment.

Purchasing power parity achieved by us and canadian dollor, Under what circ... Under what circumstance would the U.S. dollar and the Canadian dollar be said to have achieved purchasing power parity? The U.S. dollar and the Canadian dollar possible conside

Example of securitization, The process of securitization can best be ... The process of securitization can best be understood by taking the following example. Assume that there exists an NBFC which has hire purchase as its major busine

Types of rating - sovereign rating, Sovereign Rating This... Sovereign Rating This includes rating a country as to its creditworthiness, probability of default, etc.

Types of rating - shadow rating, The issuer will not have to disclose... The issuer will not have to disclose the rating to the public. The firm can, either independently or with the help of its investment banker, assess its shadow