Homework answers / question archive / 1) What is compounding and discounting? Please explain and provide examples that illustrate what happens to present and future values when either the length of time is increased, or the rate of investment increases/decreases

1) What is compounding and discounting? Please explain and provide examples that illustrate what happens to present and future values when either the length of time is increased, or the rate of investment increases/decreases

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1) What is compounding and discounting? Please explain and provide examples that illustrate what happens to present and future values when either the length of time is increased, or the rate of investment increases/decreases.

2) How does a bond issuer decide on the appropriate coupon rate to set on its bonds? What is the difference between the coupon rate and the required return on a bond?