Term
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Definition
| A bond that sells below its par value, which occurs whenever the going rate of interest rises above the coupon rate |
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Term
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Definition
| A bond that sells above its par value, which occurs whenever the going rate of interest falls below the coupon rate |
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Term
| Increase in interest rates causes |
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Definition
| the price of an outstanding bond to fall |
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Term
| A decrease in interest rates will cause |
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Definition
| the price of a bond to rise |
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Term
| The market value of a bond will always approach its par value as |
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Definition
| its maturity date approaches, provided the firm does not go bankrupt |
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Term
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Definition
| The price at which a stock sells in the market today |
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Term
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Definition
The value of an asset that, in the mind of an investor, is justified by the facts
Can be different from the asset’s current market price, its book value, or both |
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Term
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Definition
| The expected price of the stock at the end of Year t |
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Term
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Definition
| The expected rate of change in dividends per share |
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Term
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Definition
| Using time value of money concepts, we realize that the value of anything is based on the present value of the cash flows the asset is expected to produce in the future |
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