* ) Calculation of all the coupons

* ) Calculation of all the coupons

* ) Difference between par and discount/premium

* ) Market prices of bonds are expressed in terms of yields, which make the bond called expensive or cheap.

*) Yield has an inverse relation to bond price. A person who got a bond on discount e.g 80 for 100 par will get yield of 20, in oppose to person who got in premium 101 where yield is -1 )

*) Yield is simply a return from investment Not including interest rates etc In general:

 If a bond is bought at par value and held to maturity, then the return is equal to the coupon rate. 

If a bond is bought at a discount and held to maturity, then the return will be higher than the coupon rate. 

If a bond is bought at a premium and held to maturity, then the return will be lower than the coupon rate. In the case of a zero-coupon bond that repays at par, the return will be determined solely by the discount.

Categories: Bonds

Naved

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