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Which methodology is used by only bonds? a. Intrinsic b. Comparative c. P/E ratio d. Answers...

Which methodology is used by only bonds?

a. Intrinsic

b. Comparative

c. P/E ratio

d. Answers b and c

e. Answers a, b and c

PLEASE EXPLAIN YOUR CHOICE

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Answer #1

Which methodology is used by only bonds?

The correct answer is option a. Intrinsic

The price of the bonds is found by using the methodology of finding the intrinsic value of the bond, which is equal to the present value of its coupon payments.

FV Price = cpn cpn Price = - 1- (1 + r) + (1+r)

Options b and c are incorrect because Comparative and P/E ratios are used to find the value of stocks, not bonds.

Can you please upvote? Thank You :-)

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