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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.
Illustration Discount bond (5 yr. bond with 10% coupon) (expected rate yield at 12%) Premium bo
discuss the applicability
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