Question

When a bond is sold, the selling price is generally equivalent to the present value of...

When a bond is sold, the selling price is generally equivalent to the present value of the bond payments

yes or no?

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Answer #1

--The statement is CORRECT, YES.

--Selling Price of Bonds = Equivalent present value of Bonds at market rate, of all the bonds payments [interest payments and face value payment]

Bonds issue price is calculated by ADDING the:

Discounted face value of bonds payable at 'applicable' market rate of interest [Face value x PV Factor], and

Discounted Interest payments amount (during the lifetime) at 'applicable' market rate of interest [Interest payment x PV Annuity factor]
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