Category: Business and Money > Accounting
Asked by: fatima1102-ga
List Price: $2.00
10 Sep 2005 23:37 PDT
Expires: 10 Oct 2005 23:37 PDT
Question ID: 566673
How much will you have to pay today, August 15th, for an 8% coupon, $1,000 par value, bond quoted at 95? The bond pays interest semiannually, on June 1 and December 1.
Re: finance- bonds
Answered By: omnivorous-ga on 11 Sep 2005 06:49 PDT
Fatima1102 -- Bonds are priced in "bond points," which indicate the percent of the face value being paid -- Trading Glossary "Bond points" (undated) http://www.trading-glossary.com/b0193.asp You've indicated that your $1,000 par value bond is priced at 95 -- meaning that you're paying $950 (before any commission). Your actual yield is higher than 8%, both because of the discount and because of the timing of your purchase (bought in August, you're only waiting until December for your first $40 payment). Google search strategy: "bond points" definition Best regards, Omnivorous-GA
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