Coupon Payment
Fixed rate bonds are a 'security' paying a fixed periodical 'coupon' or interest payment, say 6%. After some defined period, the bond will repay its 'face value' being equivalent of the principal in a loan.
The interest payment is called the "coupon" and it is usually a fixed amount per year, which is set when the bond is issued. But when you buy a bond on the market for a price that is different from the original face value, the effective interest rate is called the "yield". The reasons why the yield might be different from the coupon rate are described in the related link called Bond yields and coupon.
The present value of a bond's payment
Yes. At maturity you get the final coupon payment in addition to the return of principal.
Bondholders make money from investing in bonds in two different ways. First is a coupon payment through the life of the bond, or in another words it is a interest payment made payable to the bondholder.Secondly, the bond prices fluctuate based on the index of the interest rates.
Fixed rate bonds are a 'security' paying a fixed periodical 'coupon' or interest payment, say 6%. After some defined period, the bond will repay its 'face value' being equivalent of the principal in a loan.
You don't loose any control of your company like a share issue The bond coupon or interest payment is tax deductible expense You get a fixed rate of interest and not subject to Market fluctuations Disadvantage They Carry a higher interest rate They are not suitable for small loan amount due to the high fixed cost of issue them
Debit Interest Expense and Credit Bond Payable.
It makes the interest payment process easier - if accrued interest is collected when the bond is sold, then the payment to all bondholders is the same: the interest amount for 3 or 6 months, or whatever the payment period is
An accrual bond is a fixed-interest bond which is issued at face value and repaid at the end of the maturity period along with the accrued interest.
The interest payment is called the "coupon" and it is usually a fixed amount per year, which is set when the bond is issued. But when you buy a bond on the market for a price that is different from the original face value, the effective interest rate is called the "yield". The reasons why the yield might be different from the coupon rate are described in the related link called Bond yields and coupon.
The prices of corporate bonds fluctuate as they are traded on the bond market. Like government bonds, a corporate bond pays a fixed amount of interest each .
The present value of a bond's payment
It makes the interest payment process easier - if accrued interest is collected when the bond is sold, then the payment to all bondholders is the same: the interest amount for 3 or 6 months, or whatever the payment period is
The zero coupon bond is more sensitive to change in rate (inflation) because the market value is not based on a fixed coupon.
A fixed rate bond would be good because the interest rates on it wouldn't change or get more expensive over time. The rate you start with is set not to change.
The interest rate paid on a bond is known as the coupon rate. A $1,000 fixed rate bond with a 5% coupon rate purchased at par would yield $50 annually in interest payments.