Question

Which of these are required to calculate the current value of a bond?

Multiple select question.

Par value


Applicable market rate


Price at the time of bond issue


Time remaining to maturity


Coupon rate

Answer 1

To calculate the current value of a bond, you typically need the following:

1. **Par value**: This is the face value of the bond which will be paid back to the bondholder at maturity.

2. **Applicable market rate**: This is the current market interest rate for similar bonds, which is used to discount the future cash flows of the bond.

3. **Time remaining to maturity**: This indicates how long until the bond matures and when the par value will be returned to the bondholder.

4. **Coupon rate**: This is the interest rate that the bond pays based on its par value, typically paid semi-annually or annually, and is used to calculate the periodic interest payments.

The **price at the time of bond issue** is not needed to calculate the current value of a bond. Instead, it reflects historical information rather than current valuation.

So the correct selections are:

- Par value
- Applicable market rate
- Time remaining to maturity
- Coupon rate