Asked by kathy
If we do not use the present value concept, what impact would it have on the financial statements?
Answers
Answered by
drwls
Many factors influence present value of bonds. Basically, it is an attempt to combine recent sales data, risk of default, probability of being called, and coupon interest rate compared to anticipated inflation and the prevailing interest rate for similar maturity.
If these factors are not evaluated accurately, the value of the bond will be incorrectly estimated, and this could result is selling it too cheaply in the event of liquidation.
If these factors are not evaluated accurately, the value of the bond will be incorrectly estimated, and this could result is selling it too cheaply in the event of liquidation.
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.