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Concepts behind bond values. Reasons to issue bonds.

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What are the concepts behind bond values? What are some potential reasons behind issuing bonds?

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Your tutorial is 376 words and discusses three reasons bond value matters and the reasons for issuing bonds.

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The bond value for a corporation has a number of implications; one is the cash flow, and the other is the future cost of capital. First, the bond value is the cash that the firm will get when it issues the bond. This is determined by the interest payments specified in the bond contract and the maturity date when the bond face amount will be repaid. These two future cash promises are "valued" by the market at the current market interest rate, regardless of the interest rate used to determine the bond payment amounts (bond face interest rate). ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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