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What happens When a bond sells at a premium?
When a bond sells at a premium, it means it is sold at a price higher than its face value. This indicates that the bond's interest rate is higher than the current market interest rates. Investors pay a premium to secure a higher yield, which results in a lower effective yield compared to the coupon rate.
What does the term closed bond mean?
A closed bond refers to a type of bond issuance where the company or entity offering the bond limits the number of bonds issued. Once the predetermined number of bonds is sold, no additional bonds will be offered for sale, hence the term "closed." This is in contrast to an open bond issuance, where bonds are continuously available for purchase.
What type of set increments are bonds usually sold in?
Bonds are typically sold in increments of $1,000, known as the par value or face value of the bond. Investors can purchase bonds in multiples of $1,000 to suit their investment needs.
Can a surety bond be purchased at a bank?
Not necessarily. Surety bonds are typically sold by insurance companies or surety bond companies that specialize in providing this type of financial guarantee. While some banks may offer surety bonds, it is more common to obtain them through a dedicated provider.
What are one or two products sold in this country that are tested using the scientific method before they are placed on the market and then later found to be dangerous?
One example is pharmaceutical drugs, which undergo rigorous testing using the scientific method before receiving approval for market release. Sometimes, unforeseen side effects may emerge after widespread use, prompting recalls or warnings. Another example could be certain food additives or chemicals used in consumer products, which are initially approved based on scientific data but may later be found to pose health risks through further research and testing.
What is the difference between stock market and bond market?
Equity is bought and sold in the stock marketwhile debt is bought and sold in the bond market.
Accurately explains the difference between the stock market and the bond market?
Equity is bought and sold in the stock market while debt is bought and sold in the bond market.
What bond was sold below face value?
A bond sold below face value is referred to as a "discount bond." This typically occurs when the bond's coupon rate is lower than current market interest rates, making it less attractive to investors at face value. As a result, the bond is sold at a discount to entice buyers, who will receive the face value upon maturity, resulting in a higher effective yield. An example of this is U.S. Treasury bills, which are often sold at a discount to their face value.
How do you match a product with the type of market in which it is sold?
oil = commodity dollars = currency exchange market treasuries = bond market Corn and wheat-Commodity market Pesos and yen-Currency exchange market Munis and Treasuries-Bond market
What is a variable rate bond?
Could somebody who knows a lot about the stocks and bonds etc. answer these question 1. what is a variable-rate bond and a treasury bond future contract 2 what is example of a money market instrument use in the market place. oh one more thing If I buy a bond with the face value of 1000.00 and the coupon rate is of 6%. and I sold it one year later for 930.00 what would be my yield rate at maturity. thanks for all your help
How can bonds issued by two companies paying same contractual interest rate be issued at different prices?
To calculate present value of the bond you also need to know market interest rate. If , for example these companies were issuing their bonds in the different time and market interest rate was different then bond could be sold at premium(the bond will cost more then its face value), par (same as face value), and discount (bond will cost less then face value.)
Can you buy a bond after it has been sold out on the primary market?
Bonds are traded both in the primary market, which is the initial sale of the bonds, and in the secondary market, which is the sale of bonds subsequent to the initial sale by the issuer or underwriter.
What is an example of product market?
A product market is where finished goods and services are sold to consumers. The product market can be found at supermarkets, grocery stores, and online marketplaces
Comment on the statement The bond market is primarily an OTC market?
Yes, because bonds are not listed on an exchange but rather priced and sold between dealers and traders. They are not regulated like the listings on exchanges. The bond market is very archaic. You can't get a quote for a bond on any of the major exchanges. If you want to sell a bond, your broker shops around for a buyer, making up to 2 or 3 phone calls to get a bid offer.
What are the example of mortgage market?
Mortgage markets are typically sold between banks and hedge funds. Because they are thus so privatized, there is no formal market.
When the market rate of return for a particular bond is much less than its coupon rate the bond is selling at?
If the current interest rate is lower than the coupon rate, a bond will be priced at a premium. For example, a bond originally issued at par with a 5% coupon would initially yield 5% to an investor. If market rates subsequently dropped to 3%, the bond would be selling at a premium to reflect the lower interest rate. In this example, the original bond sold for $1,000 and had a coupon rate of 5% to yield $50 per year in interest. If interest rates dropped to 3%, the price of the bond would increase to approximately $1,667. A purchaser of the bond would still receive $50 per year in interest which would provide an annual yield of 3% ($50/$1,667 = 3.0%).
What is the difference between Yankee Bond and Bulldog Bond?
A Yankee bond is a bond issued by a foreign entity in the United States in U.S. dollars, while a Bulldog bond is a bond issued by a foreign entity in the United Kingdom in British pounds. The key difference lies in the currency of issuance and the market in which the bonds are sold.
