In finding a bond's value,the rate used to discount the bond's future cash flows is:

Question

Quizplus · Accepted Answer

The rate used to discount the bond's future cash flows is the bond's required rate of return. This is the rate of return that investors demand to invest in the bond, taking into account factors such as risk, inflation, and market interest rates. It is the rate that makes the present value of the bond's expected cash flows equal to its current market price. The other options (B, C, D) may be used in some calculations related to the bond, but they do not directly determine the discount rate used to value the bond.

In Finding a Bond's Value,the Rate Used to Discount the Bond's