- The face value of a
Treasury bill is the present value or the future
value:
- A bond’s face value refers to how much a bond will be worth on
its maturity date. In other words, it’s the value that the
bondholder will receive when their investment fully matures
(assuming that the issuer doesn’t call the bond or default).
- The price you pay for a bond may be different from its face
value, and will change over the life of the bond, depending on
factors like the bond’s time to maturity and the interest rate
environment. But the face value does not change
- The face value of a bond is the starting point for gauging
whether or not it’s a good investment for you. Combined with other
factors like the coupon rate and time to maturity, an investor can
determine how much money a bond will ultimately generate and its
value relative to other bonds on the market.
- With present value, you're thinking about the current value of
the money that you're soon to receive; with face
value, you're thinking of the money that you're
currently receiving as a result of the maturity in its
value. Face value is the value of
the item immediately, without regard for the future i.e. it is the
present value.
- An investment loses
30% in one year and gains 30% the following year, is there a net
change in value?
- Determining Percentage Gain or Loss
- Take the amount that you have gained on the investment and
divide it by the amount invested. To calculate the gain, take the
price for which you sold the investment and subtract from it the
price that you initially paid for it.
- Now that you have your gain, divide the gain by the original
amount of the investment.
- Finally, multiply your answer by 100 to get the percentage
change in your investment.
- If the percentage turns out to be negative, resulting from the
market value being lower than the book value, you have lost on your
investment. If the percentage is positive, resulting from market
value being greater than book value, you have gained on your
investment.
- Investment percentage gain=
(Price sold−purchase
price)/ purchase price
×100
Year 1: An investment
of Rs. 100 lose 30%= Value 70
Year 2: An investment
value of Rs. 70 gains 30%= Value 70+30%*70=91
So, change in value=100-91=9.
- In loan
amortization, does the ratio of principal to interest in each equal
payment increase or decrease with time.
- An amortized loan payment first pays off the interest expense
for the period while the remaining amount reduces the principal. As
the interest portion of the payments for an amortization
loan decreases, the principal portion
increases.
- Since your interest is calculated on your remaining loan
balance, making additional principal payments every month will
significantly reduce your interest payments over the life of the
loan. Paying down more principal increases the amount of equity and
saves on interest before the reset period.
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