SUMMARY Homework Help

SUMMARY

> Valuation is the process that links risk and return to determine the worth of an asset/security. The key inputs in the valuation process are expected returns (cash flows), their timing / pattern and the risk (required return).
> The value of a security is the present/discounted value of all future cash-flows associated with it over the relevant/specified period. Symbolically,

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The value of a bond is the present value of the contractual payments by its issuer from the beginning till maturity.

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Verification

Posted by: andy