State the rate of return of a bond - debt securities, Financial Management

Assignment Help:

Rate of return of a Bond

In case of bonds, rather than dividends, investor is entitled to payments of interest yearly or semi-annually. Investor also benefits if there is an appreciation in value of bond, otherwise there is redemption of the bond at par value or at premium. Using present value formula developed above we can say that:

758_return of bond.png

Here interest amount is individually brought to its present value or we could apply the annuity factor table to get its present value. Principal amount is brought to its present value when it is due.

Or to use the tables the change would be:

Present Value = Interest Amount * (Present Value Annuity Factor n, i) + Principal Amount* Present Value Interest Factor n, i)

 

 


Related Discussions:- State the rate of return of a bond - debt securities

What is a security?, What is a security? The Securities are claims on f...

What is a security? The Securities are claims on financial assets.  They can be explained as "claim checks" that give their owners the right to obtain funds in the future.  Sec

Cash budget, stauffer , inc., has estimated sale and purchase requirments f...

stauffer , inc., has estimated sale and purchase requirments for the last half of coming year. parepare cash budget for the month of

Define debenture, Debenture Debenture is a document holding an acknowl...

Debenture Debenture is a document holding an acknowledgment of indebtedness on the part of organizations, usually secured by a charge on the company's assets.

Financial statement analysis , Case Study based on Financial Statement Anal...

Case Study based on Financial Statement Analysis of Hatsun Agro Private Limited 800x600 Normal 0 false false false EN-IN X-NONE X-NONE

Different cost of capital with changed proportions, Different Cost of Capit...

Different Cost of Capital with Changed Proportions: It is quite possible that the specific costs of capital of different sources may be affected by the amount of funds' raised and

What are the objectives or goals of financial management, What are the Obje...

What are the Objectives or goals of Financial Management? Objectives of Financial Management: - It is the responsibility of the top management to lay down the objectives or goa

DIVIDEND, dividend decisions has an influence on the share value and subseq...

dividend decisions has an influence on the share value and subsequently the overall company value.

What are free cash flows, What are "free cash flows?" Free cash flows s...

What are "free cash flows?" Free cash flows signify the total cash flows from business operations that are available to be distributed to the suppliers of a firm's capital each

Evaluate the fair value of the net assets, IFRS 3 Business combinations n...

IFRS 3 Business combinations necessitate goodwill on gaining to be calculated at the date control is gained. The second gaining gives ROB a 75% holding and consequently control o

Importance of inventory management, Q. Importance of Inventory Management ...

Q. Importance of Inventory Management 1) Inventory helps in smooth and efficient running of business. 2) Inventory provide service to the customers immediately or at a short

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd