When a bond is issued at a price higher than its par value, the difference is called bond premium. The bond premium must be amortized over the life of the bond using the effective interest method or straight-line method.
Define single bond. single bond synonyms, single bond pronunciation, single bond translation, English dictionary definition of single bond. n. A covalent bond in which one electron pair is shared by two atoms. American Heritage® Dictionary of the Engl
When a bond sells for more than its face value due to decrease in market interest rate, it is called a premium bond. When a bond sells for less than its face value due to increase in market interest rate, it is called a discount bond. Value of bond Bond Value=C*[1−1/(1+r)t...
Similarly, bond premium occurs when the coupon rate is higher than the market expectation of required return. Due to higher coupon rate, there is high demand for the bond and it sells for a price higher than the face value of the bond. The difference between the face value of the bond ...
Once you know the bond’s par value, determine if the bond was sold at its face value, at a premium or at a discount. * If the bond’sinterestrate equals the current market rate, it sells at par. If the bond’s interest rate is higher than the current market rate, it sells at ...
For risking the loss of principal, investors are compensated by regular coupon payments consisting of a variable interest rate and a risk premium.2 If no catastrophe event occurs during the life of the bond, then the principal is returned to investors upon the bond's maturity. The catastrophe ...
Exercise108(Static)Straight-Line: Recording bond issuance and premium amortization LO P3 Wookie Company issues10%,five-year bonds, on January1of this year, with a par value of $200,000and semiannual interest payments.
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Premium Photo from wallpaperflare.com The premium is the amount you pay every month for your health insurance plan. The premium amount depends on the plan you choose. Often, the premium price affects the price of the other features.