0
It goes to the investor who buys the bond.
A zero coupon bond is a bond in which, the investor need not pay any premium (coupon) above the face value of the bond while purchasing it.
Let us say a company issues a $10,000 bond at a discount of 10% with zero coupon, it is enough if the investor pays $9000 to buy the bond. At the time of maturity he would get back $10,000. This 10% discount can be compared to the interest earned on the investment for the investor.
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∙ 15y ago
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James has purchased a 10-year bond that pays a 50 coupon. If interest rates go up .?
the bond PRICE will go DOWN
James has purchased a 10-year bond that pays a 50 coupon If interest rates go up what happens?
the bond PRICE will go DOWN
Where can someone find credit cards that have a zero interest rate?
There are several places where someone can go to find credit cards that have a zero interest rate. Websites such as, creditcards, and comparecards, both list credit cards that have a zero interest rate.
Does U.S. Bank offer the lowest interest credit cards?
Usually a bank that has Zero percent interest only has it for a certain period of time. You can not go any lower than zero percent interest.
What is the relationship between interest rates and bond prices?
There is an inverse relationship between price and yield: when interest rates are rising, bond prices are falling, and vice versa. The easiest way to understand this is to think logically about an investment. You buy a bond for $100 that pays a certain interest rate (coupon). Interest rates (coupons) go up. That same bond, to pay then-current rates, would have to cost less: maybe you would pay $90 the same bonds if rates go up. Ignoring discount factors, here is a simplified example, a 1-year bond. Let's say you bought a 1-year bond when the 1-year interest rate was 4.00%. The bond's principal (amount you pay, and will receive back at maturity) is $100. The coupon (interest) you will receive is 4.00% * $100 = $4.00. Today: You Pay $100.00 Year 1: You receive $4.00 Year 1 (Maturity): You Receive $100 Interest Rate = $4.00 / $100.00 = 4.00% Now, today, assume the 1-year interest rate is 4.25%. Would you still pay $100 for a bond that pays 4.00%? No. You could buy a new 1-year bond for $100 and get 4.25%. So, to pay 4.25% on a bond that was originally issued with a 4.00% coupon, you would need to pay less. How much less? Today: You Pay X Year 1: You Receive $4.00 Year 1 (Maturity): You Receive $100 The interest you receive + the difference between the redemption price ($100) and the initial price paid (X) should give you 4.25%: [ ($100 - X) + $4.00 ] / X = 4.25% $104 - X = 4.25% * X $104 = 4.25% * X + X $104 = X (4.25% + 1) $104 / (1.0425) = X X = $99.76 So, to get a 4.25% yield, you would pay $99.75 for a bond with a 4.00% coupon. In addition to the fact that bond prices and yields are inversely related, there are also several other bond pricing relationships: * An increase in bond's yield to maturity results in a smaller price decline than the price gain associated with a decrease of equal magnitude in yield. This phenomenon is called convexity. * Prices of long term bonds tend to be more sensitive to interest rate changes than prices of short term bonds. * For coupon bonds, as maturity increases, the sensitivity of bond prices to changes in yields increases at a decreasing rate. * Interest rate risk is inversely related to the bond's coupon rate. (Prices of high coupon bonds are less sensitive to changes in interest rates than prices of low coupon bonds. Zero coupon bonds are the most sensitive.) * The sensitivity of a bond's price to a change in yield is inversely related to the yield at maturity at which the bond is now selling.
What year did Zero from holes go to Camp Green Lake?
unknown ;)
Can I use this Yankee Candle coupon online?
Unless the coupon has a coupon code you can not use it online. You will have to go to the actually store in order to use the coupon.
Where can I spend a discount tire coupon?
You can spend a discount tire coupon at sears, walmart, good year and maybe also at pepboys. It is much much better if you will call them first before you go to purchase.
If you close a credit card does the APR go to zero?
No, the applicable interest and fees will still be charged until the balance of the account is paid.
Coupon codes for footgearpluscom?
All you have to do to find coupon codes is go on line and search coupon codes for...... Hope this helps!
What is the best pizza coupon to use?
If you go to Little Caesars Pizza you do not need a coupon and the pizzas are only five dollars. If you go there on Wednesday, pizza is only $3.99 and no coupon is required.
What is usually a better investment- a coupon bond or discount bond?
Coupon bond= pay $A now. receive future periodic coupon and at maturity receive face value Discount bond= pay $B now. receive nothing until maturity where you receive face value. B is always less than A. That is, you pay less upfront investing in Discount Bond compared to Coupon Bond. But, you don't receive periodic cash flow by investing in Discount Bond. So clearly which is better depends on how much money you have at present and your expectation of future interest rate (going up or down). If you expect interest rate/yield to go down in the future, then clearly you don't want to be sitting on a pile of money and earn meager interest on it. This is called re-investment risk. You risk having unfavorable interest rate to re-invest the cash flow (coupon) you'll get in future. In this case, locking in the current interest rate/yield by buying discount bond is preferable. The same logic apply if you expect interest rate/yield is going to rise, in which case buying a coupon bond is preferable since you can re-invest the cash flow (coupon) you'll get in future at a higher rate. You can't do so with Discount Bond coz you receive no payment and the interest/yield is locked.
