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You would need to know a Yield To Maturity to answer this question.
The yield to maturity will be 5% since both Face Value and Redemption value are same. If you purchase the bond for 95 or 105 your yield to maturity will change than what the coupon rate is.
A zero-coupon note is a note which pays at maturity the value of the note with no separate interest payments.
if a bond has finite maturity or limited maturity then we must consider not only the interest rate stream but also the maturity value (face value).regardsSajida Gul
4 years
Coupons, face amount, maturity value and maturity rate all are associated with bonds. Coupons are a type of bond and the face amount tells how much the coupon is worth until it matures, gaining interest.
A zero-coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments, or have so-called "coupons," hence the term zero-coupon bond.
Find the amount of interest added at each compounding interval (also called the periodic rate).Calculate the interest added for the first time interval.Add the interest to the value of the debt security to find the ending value for the period.Use a formula to calculate maturity value.
Coupon rate is simply just the annual coupon payments paid by the issuer relative to the bond's face or par value.Coupon rate can be calculated by dividing the sum of the security's annual coupon payments and dividing them by the bond's par value. For example, a bond which was issued with a face value of $1000 that pays a $25 coupon semi-annually would have a coupon rate of 5%.Source: investopedia
Zero coupon bonds do not pay interest and are therefore sold at a steep discount to face value depending on the maturity date of the bond. Due to the time value of money, the discount on a 30 year zero coupon bond will be much greater than on a 10 year zero coupon bond. At maturity bondholders will receive the full face value of the bond which provides bondholders a return. For example, a 30 year zero coupon bond with a face value of $1,000 and sold for $500 would return a $500 profit after 30 years. Holders of zero coupon bonds can sell the bonds at any time before maturity. If an investor bought zero coupon bonds prior to a steep drop in interest rates, the value of the zero coupon bonds would increase and could be sold at a profit.
Coupon - periodical cash payment Corpus or Face Value - amount paid at maturity
You're missing one of the following: * Coupon value * Bond present/purchasing value As it stands, there's insufficient information.