BPP Q225

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September 3, 2019 at 10:58 pm #544621
amysnowy
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Hi Tutor

it calculates the market price for an irredeemable loan, interest will be paid shortly, why the market price includes the interest to be paid?

Thanks
September 4, 2019 at 12:03 pm #544689
John Moffat
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If the interest is about to be paid, then we need a cum int market value. Given that the MV is the PV of future receipts by the investors, then it must include the interest about to receive.

Have you watched my free lectures on the valuation of securities?
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