A coupon rate is the yearly interest rate payout on a bond that is communicated as a percentage of the value of the bond...
A bond discount yield occurs when the actual yield of the bond is lower than the market rate of the bond. Premium and discount bonds are different. Premium bonds are sold at a higher value, while discount bonds are issued at a discount. ...
Now, let’s look at theamortization of premium on bondspayable. In this case, the investor pays more than the face value of a bond when the stated interest rate is greater than the market interest rate. If this happens, the issuer amortizes the excess payment over the life of the bond...
The effective interest rate of a bond is usually the market interest rate and the bond's yield-to-maturity (as opposed to the interest rated stated on the face of the bond)
A bond is essentially a loan an investor makes to the bonds' issuer. That issuer can be the government in the form of municipal bonds, companies in the form of corporate bonds, or even international organizations.
Bonds pay a specified interest rate (either fixed or variable) until they mature, and the issuing entity must repay the principal. Image source: Getty Images What is a bond? Bonds are a fixed-income instrument. They are one of the three main asset classes, along with equities (e.g., ...
A payment bond is a type of guarantee. In most cases, a contractor gets a payment bond to guarantee that he or she will pay those...
What is the main difference between a bond and a share of stock? When does a premium on bonds payable occur? Explain. What is the difference in the trading volume between Treasury bonds and corporate bonds? Give examples and/or evidence. ...
A premium bond is a bond trading above its face value, or in other words; it costs more than the face amount on the bond. A bond might trade at apremiumbecause its interest rate is higher than current rates in the market. These bonds are different from a type of lottery bond account ...
A bond's yield tomaturityis equal to the interest rate which makes thepresent valueof all a bond's futurecash flowsequal to its current price. These cash flows include all the coupon payments and maturity value. Solving for YTM is a trial and error process that can be done on a financia...