Question

The following bond list ls from the business section of a financial newspaper on \( 2 a n v a r y \). \( 1,2016 \). Assume that each bond shown matures on January \( : \) in 5, 10, or 30 yeacs. Each b

Answer 1

A bond is an "I owe you" note in exchange for capital. It has a face value, coupon rate, and maturity date. The present value is the most that a buyer would pay for a bond.

Step-by-step explanation:

In financial terms, a bond is an "I owe you" note that an investor receives in exchange for capital (money). A bond has several parts, including a face value, coupon rate, maturity date, and market interest rates.

The face value is the amount the borrower agrees to pay the investor at maturity, while the coupon rate is the interest rate paid to the investor. The maturity date is when the borrower will repay the face value and the last interest payment.

By combining these factors, a buyer can compute a bond's present value, which is the maximum amount a buyer would be willing to pay for the bond.