discounted-cash-flow

Here we look at the calculation and interpretation of two of the most popular decision-making tools in corporate finance: Net Present Value and Internal Rate of Return.

The theoretical bond price is the present value if the future cash flows are discounted at the spot (aka, zero rates); in other words, it is the price given by discounted cash flow (DCF). We don't expect the traded (observed) price to exactly match because the DCF price is fundamental, yet...