One of the most basic questions an investor can ask is how much is this investment worth? If you buy an asset, it’s usually because you believe it’s cheap – that it is worth more than the market is currently charging for it. But how do you calculate an investment’s value?
It’s quite easy for something like a bond. You usually know the ‘coupon’ a bond will pay each year, and also when it will mature (ie, when you’ll get your money back). So you can work out the amount of money it will produce over its lifespan, then decide [...]
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