The PV of the debt obligation is not the sum of the individual discounts, rather it its the obligation discounted by 2 periods. This is logical and straightforward based on the fact that discounting operates on the notion that money today is worth more than money tomorrow - both due to inflation and to the opportunity cost of a "risk free" investment. It makes no sense to say that the debt obligation is worth 1.7x more today than in 2 years when the rate is a 8%.
I think you got the PV calculation wrong. Since the turion expenses would be made in two years time, it implies that the value you derived should be at time one, you would need to discount one more time to get the PV at time zero
Nicely explained👌, my doubt is how to immunize with multiple bonds
The PV of the debt obligation is not the sum of the individual discounts, rather it its the obligation discounted by 2 periods. This is logical and straightforward based on the fact that discounting operates on the notion that money today is worth more than money tomorrow - both due to inflation and to the opportunity cost of a "risk free" investment.
It makes no sense to say that the debt obligation is worth 1.7x more today than in 2 years when the rate is a 8%.
thanks for the amazing video!!!!!!
Great video! Thank you!
Good
very helpful!
Hello, how did you calculate the change in net position please?
Hello can you explain...?
How the tuition fees is paid gradually?
I think you got the PV calculation wrong. Since the turion expenses would be made in two years time, it implies that the value you derived should be at time one, you would need to discount one more time to get the PV at time zero