Asked by Nishallinee Shanmugam on Apr 28, 2024
Verified
When calculating the issuance price of a bond,use the market rate to compute the present value of the bond's future cash flows.
Issuance Price
The price at which a company's securities are offered to the public for sale for the first time.
Market Rate
The prevailing price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.
Present Value
The current worth of a future sum of money or stream of cash flows given a specified rate of return.
- Mastering the anatomy and monetarily significant aspects of bonds, including subsequent cash flows, charges of interest, and the issuance cost.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
True
Explanation :
The issuance price of a bond is determined by calculating the present value of its future cash flows using the market rate as the discount rate. This is known as the bond's fair value or market value.
Learning Objectives
- Mastering the anatomy and monetarily significant aspects of bonds, including subsequent cash flows, charges of interest, and the issuance cost.
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