Bonds

Last updated Dec 10, 2022 Edit Source

• Securities

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The “par value” of a bond is $1,000 (unless otherwise stated).

Par Value is also known as:

• Face Value
• Principal Amount

Bonds are quoted as a percentage of par.

For example, a bond priced at 105 is worth $1,050, or 105% of $1,000.

The interest rate of a bond is how much it pays out in total every year, quoted as a percentage of par value.

Watch out

Bonds often pay out semiannually, so if a bond pays 4% annually, note that every payment will be half, or 2%.

Interest is also known as:

Coupon

• Term
• Serial
• Serial Balloon