Relationship between rates and bonds
Why do people invest in bonds rather than depositing them with banks? The answer is simple because the bonds offer a higher rate of interest than that of bank Let's assume there is a $100,000 bond with a stated interest rate of 9% and a remaining life of 5 years. This means that the bond is promising to pay $4,500 at the Although this present value relationship reflects the theoretical approach to determining the value of a bond, in practice its price is (