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    Bond pricing is determined by discounting a bond's future cash flows using an appropriate discount rate. The discount rate considers both risk-free rates as well as risk premiums that account for factors like a bond's ranking, covenants, marketability, and credit rating. Higher risk is associated with higher risk premiums and lower bond prices.

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    Bond pricing is determined by discounting a bond's future cash flows using an appropriate discount rate. The discount rate considers both risk-free rates as well as risk premiums that account for factors like a bond's ranking, covenants, marketability, and credit rating. Higher risk is associated with higher risk premiums and lower bond prices.

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    6 views1 page

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    Uploaded by

    khuramafsar
    Bond pricing is determined by discounting a bond's future cash flows using an appropriate discount rate. The discount rate considers both risk-free rates as well as risk premiums that account for factors like a bond's ranking, covenants, marketability, and credit rating. Higher risk is associated with higher risk premiums and lower bond prices.

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    Formulae and concept of Bond Pricing (Pricing of Bonds) Factors affecting the choice of Discount Rate (risk free

    rate and risk premium, ranking, covenants, marketability, credit rati ng etc)

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