the price you are willing to pay untill maturity, can someone help, or give me the required formulas??
2007-12-12 02:25:26 · 3 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
Market price is the price of the bond on the market. The price you are willing to pay is how much you are prepared to pay for the bond.
2007-12-12 02:29:08 · answer #1 · answered by Anonymous · 0⤊ 0⤋
www.finysis.net is a good website, which will help. There are three aspects to your question!:
- The market price is the amount which it would cost you now to purchase the bonds by going to a bond dealer / bank.
- The "fair value" of the bond investment is the net present value of all projected future cash flows: this is an ESTIMATE of what the bonds are worth based on your future expectations of cash flow. If the market price is less than your estimate of fair value, the investment looks positive, subject to your particular risk appetite.
- The amount you are willing to pay should be related to the fair value as described above, but it might simply be related to personal circumstances: i.e., do you have sufficient funds to purchase the bonds, or do you view the company as too risky to purchase at the market price or even fair value (i.e. risk averseness issue).
There is an excellent website, www.finysis.net providing a free investment course, including explanation of discounted cash flow / fair value, and selling e-books and software to help financial and investment analysis.
2007-12-14 04:06:45 · answer #2 · answered by STEPHEN J 2 · 0⤊ 0⤋
Stop thinking Bonds and start thinking Oranges ..
If Tesco was selling Oranges at 50p and you only wanted to pay 40p you would have to wait for the price to come down.
If Tesco was a Bond Dealer you could place a 'Limit order' for Oranges at 40p. If the price ever dropped to 40p, Tesco would then sell you some .. if the price never dropped, you would never get any ..
2007-12-12 03:44:00 · answer #3 · answered by Steve B 7 · 0⤊ 0⤋