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A Bond Sells at a Discount When the:
Its coupon rate is greater than its current yield and its current yield is greater than its yield to maturity. For example if interest rates have risen since the bond was purchased the bondholder may have to sell at a discountbelow par. Beards Beardlife Beardstyle Beardly To understand this concept remember that a bond sold at par has a coupon rate equal to the market. . Suppose K d 17 on previous example. Stated rate is higher than the coupon rate. Correct answer is b. The discount rate that will set the present value of the payments equal to the bond price iii. The face value or par value of a bond is the principal due when the bond matures. As part of the bond issuance process the issuer sets a. A discount bond in contrast has a coupon rate lower than the prevailing interest rate for that bond maturity and credit quality. A company issues 9 20-year bonds with a par value of 750000. Answered Interactive ...




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