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Valuation of Bonds

Valuation of Bonds - VALUATION VALUATION CHARACTERISTICS OF...

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1 VALUATION & VALUATION & CHARACTERISTICS OF CHARACTERISTICS OF BONDS BONDS Stony Brook College of Business BUS 330 V. Giardini
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Market Efficiency and Asset Market Efficiency and Asset Valuation Valuation In efficient capital markets, current security prices reflect everything that is known about the prospects of an individual security. There are three levels of market efficiency: weakly efficient market semi-strong efficient market strong-form efficient market
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3 BASIS OF VALUE BASIS OF VALUE Investing Forgoing current consumption in favor of future benefit. Return: What an investor receives for making an investment Note: Return can be signified by "k" or "r" 1. Present Value (PV) is the PRICE of the security that returns future cash flows (FV). 2. Rate of Return (k) is the interest rate that equates the present value of a security's expected future cash flows (FV) with its current price (PV). 3. Rate of Return 2245 Yield
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BOND VALUATION - BASIC IDEAS BOND VALUATION - BASIC IDEAS Intrinsic Value The price at which a security SHOULD sell. Valuation
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Valuation of Bonds - VALUATION VALUATION CHARACTERISTICS OF...

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