In order to measure the carrying value of investments in bonds, which of the following time value of money concepts is used?
A)the present value of an ordinary annuity
B)the future amount of a single sum
C)the future amount of an ordinary annuity
D)all of these

Question

Quizplus · Accepted Answer

The carrying value of investments in bonds is determined by calculating the present value of the expected future cash flows, which include interest payments (an ordinary annuity) and the principal repayment (a single sum) at maturity. The present value of an ordinary annuity is the most relevant concept here, as it is used to calculate the present value of the series of periodic interest payments that the bond will generate.

In Order to Measure the Carrying Value of Investments in Bonds