Answer the following questions in your own words:
Elaborate on these two integral precepts within the field of finance that must be understood for their successful application.
The relationship between a bond’s price and the yield to maturity is an inverse relationship. Explain; make sure you don’t simply restate the inverse relationship, but explain the reasoning.
If you can remember and understand the “why”, you will never forget this important relationship. Examples are encouraged.
Why are stock valuation models dependent upon expected dividends, future dividend growth and an appropriate discount rate? be sure to review how we value any financial asset which will help dissect this answer.
