if the coupon rate is greater than the yield to maturity the bond will pay $ 5.
if the coupon rate is greater than the yield to maturity the bond will pay $ 5.
if the coupon rate is greater than the yield to maturity the bond will?
$ 5
a corporation issues a bond, an interest earning debt security, to an investor to raise funds. the bond has a face value, formula_38, coupon rate, formula_39, and maturity date which in turn yields the number of periods until the debt matures and must be repaid. a bondholder will receive coupon payments semiannually (unless otherwise specified) in the amount of formula_40, until the bond matures, at which point the bondholder will receive the final coupon payment and the face value of a bond, formula_41. the present value of a bond is the purchase price. the purchase price is equal to the bond's face value if the coupon rate is equal to the current interest rate of the market, and in this case, the bond is said to be sold 'at par'. if the coupon rate is less than the market interest rate, the purchase price will be less than the bond's face value, and the bond is said to have been sold 'at a discount', or below par. finally, if the coupon rate is greater than the market interest rate, the purchase price will be greater than the bond's face value, and the bond is said to have been sold 'at a premium', or above par. the purchase price can be computed as:
present value
bullet::::- hold the bond until maturity, and









































bullet::::- redeem the bond at par.









































section::::yield and price relationships.:coupon rate.









































the coupon rate is simply the coupon payment formula_12 as a percentage of the face value formula_13.









































coupon yield is also called nominal yield.









































section::::yield and price relationships.:current yield.









































the current yield is simply the coupon payment formula_12 as a percentage of the ("current") bond price formula_3.









































section::::yield and price relationships.:relationship.
bond valuation