Applications of Money - Time Relationships - NPV | Net Present Value (PW)

3 important questions on Applications of Money - Time Relationships - NPV | Net Present Value (PW)

Give an interesting observation considering NPV

The higher the i (interest rate) and the farther into the future the lower the NPV.

What is a bond?

An IOU where you agree to lend the bond issuer money for a specified length of time. In return, you receive periodic interest payments.

As a potential investor in bond what are [2] most common situations faced?

  1. Desired yield rate, how much should you be willing to pay
  2. Stated purchase price, what will you yield be?

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