Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

When pricing a bond, how many cash flows must be discounted to present value?

Only the first coupon payment

All future coupon payments and the face value at maturity

Only the last coupon payment and the face value

Only the face value at maturity

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Verified step by step guidance

Understand the concept of bond pricing: A bond's price is determined by the present value of all future cash flows associated with the bond, which includes periodic coupon payments and the face value (principal) at maturity.

Identify the cash flows involved: For a bond, the cash flows typically consist of regular coupon payments (interest payments) and the repayment of the face value (principal) at maturity.

Apply the present value formula: Each cash flow must be discounted to its present value using the formula \( PV = \frac{CF}{(1 + r)^t} \), where \( CF \) is the cash flow, \( r \) is the discount rate, and \( t \) is the time period.

Discount all future coupon payments: Calculate the present value of each coupon payment by applying the formula for each time period until maturity.

Discount the face value at maturity: Calculate the present value of the face value (principal) by applying the formula for the time period corresponding to the bond's maturity.