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Bond market
Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
High-yield debt
The fair price of a straight bond (a bond with no embedded option; see Callable bond) is determined by discounting the expected cash flows Because the price is the present value of the cash flows, there is an inverse relationship between price and discount rate the higher the discount rate the lower the value of the bond (and vice versa). A bond trading below its face value is trading at a discount, a bond trading above its face value is at a premium. The coupon yield is simply the coupon payment (C) as a percentage of the face value (F).
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