Bond Valuation
Bond valuation is made on the basis of principle that works behind valuation of direct claim securities. The principle is that a bond value is derived from the associated cash flows it generates e.g. coupon receipt and par recovery at maturity. So the bond valuation is directly associated with the value of securing real assets of the company. The operations of the company generate cash inflows from sale of its products. Hence the income of bonds is actually linked with the income of the business that is generated from working on real assets.