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When trading in bonds, accretion is the capital gain expected when a bond is bought at a discount to its par value, [1] given that, it is expected to mature at par. Accretion can be thought of as the antonym of amortization: Accreting swap vs Amortising swap.
Amortization is the acquisition cost minus the residual value of an asset, calculated in a systematic manner over an asset's useful economic life. Depreciation is a corresponding concept for tangible assets. Methodologies for allocating amortization to each accounting period are generally the same as those for depreciation.
Amortization of debt has two major effects: Credit risk First and most importantly, it substantially reduces the credit risk of the loan or bond. In a bullet loan (or bullet bond), the bulk of the credit risk is in the repayment of the principal at maturity, at which point the debt must either be paid off in full or rolled over.
Amortization applies to your intangible assets and gives you a better idea of your business’s value.
Amortization applies to intangible assets, like patents, trademarks and goodwill. These assets, while non-physical, also provide value over time. These assets, while non-physical, also provide ...
Accessibility: Bond funds often have lower minimum investment requirements than individual bonds. Individual bond vs. bond fund: Key differences.
Bond valuation is the process by which an investor arrives at an estimate of the theoretical fair value, or intrinsic worth, 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.
In the case of an amortizing bond, it is the unpaid principal = outstanding principal amount (OPA) = principal balance. In the case of an accreting bond, where the principal increases with the accumulation of notional coupons that are not paid, Principal means principal balance (after the previous coupon). The latter is the most general ...