The value of a bond may be expressed as the sum of

Question

Quizplus · Accepted Answer

The present value of the maturity value represents the amount that will be received at the bond's maturity date, while the sum of the present values of the interest payments represents the total amount of interest payments that will be received over the life of the bond. Thus, adding these values together provides an approximation of the bond's total value. Option A is incorrect because it does not take into account the present value of the interest payments. Option B is incorrect because it references the par value rather than the maturity value. Option D is incorrect because there is a correct answer.

The Value of a Bond May Be Expressed as the Sum