Discuss valuing bonds and how interest rates affect their value. Also consider the importance of the yield-to-maturity (YTM).

When valuing bonds, it is important to consider how interest rates will affect their value over time. Generally speaking, if the current market rate is higher than what was initially promised then the price of a bond will decrease whereas if it is lower then its cost will increase accordingly. This phenomenon can be seen by taking a look at the yield-to-maturity (YTM) which measures the return that an investor would receive from buying and holding a bond until it matures.

Furthermore, understanding YTM helps investors decide whether or not purchasing certain bonds is worth their while since this calculation takes into account any potential gains or losses incurred due to changes in interest rates during the investment period. Additionally, this concept also applies when determining how much should be paid when reissuing bonds as well as determining how much cash flows must be generated in order for them to meet their stated objectives financially. Thus, when assessing bond values risk factors such as fluctuations in market trends should always be taken into consideration carefully before making any decisions moving forward.