Questions About Bond and Gordon Growth Model
I can't for the life of me understand why bond prices are inversely correlated to the yield. Apparently lower yield is higher bond price. For exmaple, ff you pay $10,000 for a bond, you would want to profit more than you would if you invested $1,000 for the bond because you're risking 10x more if the bond issuer defaults right?
Also, for the gordon growth model is the the discount dividend model or the TV value formula?
When you google gordon growth model the DDM formula comes up but also people call the gordon growth method the formula used when calculating TV in DCFs.
and finally,
When using multiples to find the TV value in a DCF, you look at comparable companies right? But what are you looking at? Are you looking for comparable companies lets say EV/EBITDA and lets say it averages to 7, you would multiply your EBITDA by 7 in the final year and that's your TV?
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