Bond investors normally pay / invest money now to purchase bonds in anticipation of interest and principal payments to be received in the
future therefore we must consider the element of -
O Current cost of Bond
O Time Value of Money
O Market value of Bond
O Maturity value of Bond
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Market value of Bond
- Whenever you buy a bond, you are lending money to the company or government that issued the bond.
- Each bond has a par value. I. H. Amounts that a company or government must repay a loan.
- If you hold a bond until the maturity date, you get its face value.
- However, determining the market price of a bond is more difficult than simply looking at its face value.
- Investors buy bonds with the interest they earn and trade them to get the best return on their investment.
- Thus, the price continues to change throughout the life of the bond (usually years or decades).
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