The value of a corporate bond can be derived by calculating the present value of the interest payments and the present value of the face value at the bond's
A) Current yield.
B) Coupon rate.
C) Required rate of return.
D) Effective rate.
E) Prime rate.

Question

Quizplus · Accepted Answer

The present value of the interest payments and the present value of the face value of a corporate bond are calculated using the required rate of return or yield to maturity. The required rate of return is the minimum rate of return investors expect to earn on a bond investment, considering the risk of the investment and the current market conditions. Therefore, choice (C) is the best answer.

The Value of a Corporate Bond Can Be Derived by Calculating