{"id":4525,"date":"2021-05-30T16:03:32","date_gmt":"2021-05-30T15:03:32","guid":{"rendered":"https:\/\/www.simtrade.fr\/blog_simtrade\/?p=4525"},"modified":"2025-09-04T14:59:07","modified_gmt":"2025-09-04T14:59:07","slug":"bond-valuation","status":"publish","type":"post","link":"https:\/\/www.simtrade.fr\/blog_simtrade\/bond-valuation\/","title":{"rendered":"Bond valuation"},"content":{"rendered":"

\"Georges<\/p>\n

In this article,\u00a0Georges WAUBERT introduces you to bond valuation.<\/p>\n

Investors seek to determine how the different characteristics of a bond can influence its intrinsic value in order to know whether it is a good investment or not. To do this, they will look at the theoretical value of a bond, i.e. its present value. How can this be determined? How to interpret it?<\/p>\n

Present value of a bond<\/h2>\n

The price of a bond is equal to the present value of the cash flows it generates. The holder of a bond will, by definition, receives a set of cash flows that will be received over a period of time. These flows are not directly comparable. A euro at time t1<\/em> does not have the same value as a euro at time t2<\/em>. It is therefore necessary to determine the present value of future cash flows generated by the bond. This is calculated by multiplying these flows by a discount factor.<\/p>\n

The discount rate chosen for this operation is determined by observing those already applied on the market to bonds comparable in duration, liquidity and credit risk. The convention is to discount all flows at a single rate, even if this does not reflect reality.<\/p>\n

The present value of a bond is equal to the sum of the present value of the nominal amount and the present value of future coupons.<\/p>\n

\"Capture<\/a><\/p>\n

Where:<\/p>\n