Investment and Bond Valuation Quiz

Investing aims to generate a profit or return on investment.

Bonds represent debt securities where investors lend money to issuers.

Current yield measures the annual return on a bond relative to its market price.

PV represents the present value, FV is the future value, r is the discount rate, and n is the number of periods.

Coupon rate is the fixed annual interest rate paid by the bond issuer.

Maturity date is when the principal amount of the bond is repaid.

Duration measures the sensitivity of a bond's price to changes in interest rates.

Bond prices are influenced by interest rates, credit rating changes, and economic conditions.

Zero-coupon bonds do not make periodic interest payments; instead, they are sold at a discount and redeemed at face value at maturity.

Bond prices typically move inversely to changes in interest rates.

Credit risk refers to the possibility of the bond issuer failing to make interest payments or repay the principal amount.

Call provision allows the issuer to buy back bonds before the maturity date.