Learn how to calculate present value and discount factors of investment of a firm. Calculation of Present Value: It is a method of assessing the worth of an investment by inverting the compounding process to give present value of future cash flows. This process is called “discounting”. The present value of 'P' of the amount 'A' due at the end [...]
Benchmark rates are rates or the prices of instruments that are traded in the market which are used for pricing of other instruments. These rates or prices are used as benchmark for floating rate instruments. In the fixed income market, it is an interest rate that the market respects and closely watches. Typically a benchmark rate should satisfy the following [...]
'Yield to maturity' means the rate of return earned on security if it is held till maturity. This can be presented in a graph called 'yield to maturity curve' which represents the interest rates and the maturity of a security. The term structure of interest rates refers to the way in which the yield on a security varies according to [...]