What is a flat -rate price?
Sometimes it is referred to as the prices of the company or the net price, it is equal to the price of the basic price of security without using any interest created by asset. The term is often associated with the prices of the bond problem and serves as a means of identifying the aspect of the value of the bond is discussed. Investors are sometimes considered to be a more stable indicator of the total security value, when determining whether the purchase of a bond problem is a good idea, they look at a flat price when buying a bond problem.
The flat price is often contrasted with what is called a dirty price. Dirty prices are simply the value of bonds that include any interest, as well as the actual price of the bonds themselves. Comparison of these two numbers is a useful way to find out what type of return on the bond has created, with respect to any interest that has already been paid as a recent payment of the coupon, or by the moment of accumulation maturityand ties.
One of the reasons why it is considered to be such a good idea when looking at the flat price is that factors can affect the amount of return that can be expected to be reasonably expected from the bond problem. This is especially true when the return is based on a fluctuating interest rate or where there is a strong possibility that the bond will be called soon. By looking in detail at the very price of the bonds, it is easier to perform projections about what will happen and decide whether the investment is worth time and effort necessary to obtain the problem of bonds.
In general, when the price of bonds is quoted in various types of market publications, it is listed by a flat price. As a result, investors are much easier to compare the relative potential of various bond problems, because the price cited is based on a factor that does not apply. Using this figure as the basis for consideration can investor examine suchrye, such as the amount of time left to maturity, and explore the history of the bond problem in terms of what yield has been generated by the moment. The investor will also consider market conditions that may affect the future return on investment between today's and due date.
In addition to investment circles, this term is sometimes used to identify the lowest price, which the owner is willing to consider as part of the sale of asset. For example, someone seller's house may decide to determine the required price of $ 200,000 in US dollars per house, but having a flat price of $ 180,000 that would be acceptable. In this particular application, the flat price is not advertised and often remains as a bit of information that is shared only between the real estate agency and the owner of the property.