Watch the video on valuing bonds. It shows how to calculate a bonds value with an example
Fantastic news! We've Found the answer you've been seeking!
Question:
Watch the video on valuing bonds. It shows how to calculate a bonds value with an example of a $1,000 bond making $100 annual payments, when the interest rate is 8%. Would there be a point (length to maturity) where you would prefer to hold a perpetuity paying $100/year over a bond with a $100 payment? Stated another way: If you had two investments to choose from, one a perpetuity that pays $100/year forever, or the other, a bond that pays interest of $100/year for 30 years, then pays back the $1000 principal, which one would you choose? You can use calculations, etc. if you want, to explain your decision!
Related Book For
Posted Date: