Options: Might or Will Is Obligated or Would Like 1. Bond valuation Aa Aa The pr

Question

Options:

Might or Will

Is Obligated or Would Like

1. Bond valuation Aa Aa The process of bond valuation is based on the fundamental concept that the current price of a security can be determined by calculating the present value of the cash flows that the security will generate in the future. There is a consistent and predictable relationship between a bond's coupon rate, its par value, a bondholder's required return, and the bond's resulting intrinsic value. Trading at a discount, trading at a premium, and trading at par refer to particular relationships between a bond's intrinsic value and its par value. These result from the relationship between a bond's coupon rate and a bondholder's required rate of return. pay, and a bondholder's required return Remember, a bond's coupon rate partially determines the interest-based return that a bond reflects the return that a bondholder to receive from a given investment.

Explanation / Answer

Answer 1) Will pay (its beacuse the coupon payments are a mandatory obligation from bond issuer)

2) is obligated (This is because required rate of return is the minimum rate of return that an investor is would earn that will induce the investor to invest in the investment)

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