The valuation of bonds is generally perceived to be more difficult than the valuation of equity securities.

Question

Quizplus · Accepted Answer

The valuation of bonds is generally considered to be simpler than the valuation of equity securities because bonds have defined cash flows (interest payments and the return of principal) and a finite maturity, making their future income streams easier to predict. In contrast, equities (stocks) do not have a predetermined return, making their valuation more complex due to the need to estimate future earnings and dividends, which are influenced by a wide range of unpredictable factors.

The Valuation of Bonds Is Generally Perceived to Be More