What is a bond? What is a bond’s par value? What are coupon payments, and how often are they normally paid? What happens when investors buy a bond below par value? When should you consider investing in bonds?
Answer to relevant QuestionsWhen an investor sells a bond in the secondary market before the bond reaches maturity, what determines the return on the bond? How do interest rate movements affect bond returns in general? How is interest rate risk affected by a bond’s maturity? How can investors use expectations of interest rate movements to their advantage? Why are prices of some bonds more sensitive to economic conditions than others? Bernie purchased 20 bonds with par values of $ 1,000 each. The bonds carry a coupon rate of 9% payable semiannually. How much will Bernie receive for his first interest payment? Mark has a Treasury bond with a par value of $ 30,000 and a coupon rate of 6%. The bond has 15 years to maturity. Mark needs to sell the bond and new bonds are currently carrying coupon rates of 8%. At what price should Mark ...
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