Time value of money and discounted cashflows

Delve into the basics of bonds, a type of tradable debt security, and explore cash flows, expected returns, and theoretical valuation.

Time Value of Money:

• Why money today is worth more than money in the future due to factors like interest rates, inflation, risk, and our natural preference to consume now.

Discounted Cash Flows:

• The process of discounting future cash flows to determine a bond’s fair value today.