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What is the implication of a high face value and a lower quoted price of a bond?
Wiki User
∙ 8y ago
Bond prices serve as a benchmark for many things, including interest rates, forecasts of future economic activity etc,
High value bonds are sometimes called premium bonds. Premium bonds are attractive for their high coupon rates that are greater than current market yields. In other words, the higher initial cost can be offset by the higher cash payments received throughout the life of the bond.
Here are the implications of Premium Bond (high face value):
- Investment is subject to decrease in value due to inflation
- Chances of winning larger cash prizes are slim
- Savings in interest-earning accounts may earn more than those in Premium Bonds
- No regular interest earned
- No guarantee of win
- Money is not instantly accessible
- Minimum and maximum investment required
However there is no advantage to buying a bond at a discount, or even a , versus one trading at a premium. Like anything in life, you get what you pay for
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Disclaimer: This information does not serve as investment advise and take due diligence when placing a trade.
Wiki User
∙ 8y ago
Wiki User
∙ 9y agoThe implication of a bond selling for a lower quoted price than the face value is that interest rates have increased since the original date of issue. As interest rates rise the price of the original bond will decline in order to provide a purchaser with the higher market rate of interest.
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How is value of a share of stock usually quoted?
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How is the value of the share of stock usually quoted?
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