Question
1. Explain why the market price of a bond may change over time, and discuss the conditions under which a parity bond may become a
1. Explain why the market price of a bond may change over time, and discuss the conditions under which a parity bond may become a discount bond or a premium bond.
2. Fully explain and discuss the notions of primary and secondary bond markets.
3. Discuss the concept of non-conventional projects, and explain which investment criterion between Net Present Value (NPV) and Internal Rate of Return (IRR) should be used to evaluate this type of projects.
4. How is the Internal Rate of Return (IRR) of an investment defined? How can an investment analyst make a decision using the IRR as a criterion?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
1 The market price of a bond is determined using the current interest rate compared to the interest rate stated on the bond The market price of the bond comprises two parts The first part is the prese...
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Step: 3
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Fundamentals of corporate finance
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
2nd Edition
978-0470933268, 470933267, 470876441, 978-0470876442
