Bond valuation

bond valuation analysis investment & finance definition
A strategy in which a bond portfolio manager attempts to buy bonds based on their intrinsic value.

Bond valuation is the determination of the fair price of a bond. As with any security or capital investment, the theoretical fair value of a bond is the present value of the stream of cash flows it is expected to generate.

Bond valuation
Bond valuation is the process of determining the fair price of a bond. As with any security, the fair value of a bond is the present value of the stream of cash flows it is expected to generate.

Although I disagree with the idea of comparing stock and bond valuations, I do agree with Buffett that government bonds are unattractive. At a yield of 2.39% for the 10-year Treasury, the best outcome is that you will earn a 2.

income security, must today equal the sum of each of its cash flows discounted at the same rate as the corresponding government security - i.e. the corresponding risk free rate. Were this not the case, arbitrage would be possible; see Bond valuation.

See also: Valuation, Share, Yield, Details, Analysis