Question:

Finance Question about Bonds and Par Value?

by Guest55684  |  earlier

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When will the market value of a bond equal its par value?

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  1. When the coupon rate (aka contract rate or stated rate) is the same as the market rate.


  2. yes i'll confirm.  when it's coupone value = market yield, the bond's price will equal it's par value.

    if the YTM > coupon, the bond trades at a discount.  and vice versa.

    which makes sense if you think about it.  the bond has a fixed coupon rate. say 5%.  but the market offers 5.5% on similarly structured bonds issued by similar companies.  it makes sense that our bond, paying only 5%, is trading at a discount.  its' the opportunity cost associated w/holding that bond.

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