Discount Bond

Bond prices and interest rates are inversely related; that is, they tend to move in the opposite direction from one another.  A fixed-rate bond will sell at par when its coupon interest rate is equal to the going rate of interest, rd.  When the going rate of interest is above the coupon rate, a fixed-rate bond will sell at a "discount," below its par value.  If current interest rates are below the coupon rate, a fixed-rate bond will sell at a "premium," above its par value.
Have more questions? Submit a request

0 Comments

Please sign in to leave a comment.
Powered by Zendesk