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What do you call annual interest the issuer promises to pay on the face value bond?
The coupon rate.
How to find the face value of a bond?
The face value of a bond can be found by looking at the bond certificate or by checking the bond's prospectus. It is the amount that the bond issuer promises to repay to the bondholder when the bond matures.
What are plain vanilla bonds?
A borrower (typically a company) will issue a bond in return for a loan. The bond is the finanicail instrument whereby the issuer promises to repay the loan (the bond face value amount) by a certain date. The bond instrument will state the applicable terms and conditions including the date for repayment and the interest rate. A vanilla bond will be a simple repayment plus interest instrument.
What is it called when a bond is selling for less than its face value?
A bond selling for less than its face value is classified as being sold at a discount. A bond can sell at a discount if interest rates increase or if the repayment ability of the bond issuer becomes questionable due to a reduction in the credit rating of the issuer.
How is annual interest on a bond calculated?
Annual interest on a bond, often referred to as the coupon payment, is calculated by multiplying the bond's face value (or principal) by the coupon rate. For example, if a bond has a face value of $1,000 and a coupon rate of 5%, the annual interest would be $1,000 x 0.05 = $50. This amount is typically paid to the bondholder at regular intervals, such as annually or semi-annually, depending on the bond's terms.
What do you call annual interest the issuer promises to pay on the face value bond?
The coupon rate.
What is the theory behind requiring bond issuers to charge bond discounts to interest expense when the discount is amortized?
When a bond matures the issuer has to pay the investor the full face value of the bond. The bond will also have a stated interest rate. If an investor will only accept a rate of interest which is higher than the stated interest rate, the issuer will likely sell the bond for less than the present value of the face value of the bond. For example, If a $100,000 bond is issued with a $4,000 discount to meet the buyers desired return, the issuer will have to pay the investor the $96,000 ($100,000-$96,000) the issuer received plus the $4,000 discount upon maturity. Since the issuer has to pay out that $4,000, upon maturity, to secure $96,000 the $4,000 discount is recognized by the issuer as interest expense (over the life of the bond).
How to find the face value of a bond?
The face value of a bond can be found by looking at the bond certificate or by checking the bond's prospectus. It is the amount that the bond issuer promises to repay to the bondholder when the bond matures.
The basic formula for computing interest on an interest-bearing note is face value of note x annual interest rate x time in terms of one year equals Interest?
(Face Value of Note) x (Annual Interest Rate) x (Time in Terms of One Year) = Interest
Consumers able and willinWhich of these is an element of a bond?
One common element of a bond is the coupon rate, which represents the annual interest rate paid by the issuer to the bondholder. This rate is typically fixed at the time of issuance. Other elements include the maturity date, which is when the bond reaches the end of its term, and the face value, which is the amount that the issuer agrees to repay the bondholder at maturity.
What are plain vanilla bonds?
A borrower (typically a company) will issue a bond in return for a loan. The bond is the finanicail instrument whereby the issuer promises to repay the loan (the bond face value amount) by a certain date. The bond instrument will state the applicable terms and conditions including the date for repayment and the interest rate. A vanilla bond will be a simple repayment plus interest instrument.
How can one determine the face value of a bond?
To determine the face value of a bond, look at the bond certificate or the bond indenture. The face value is the amount that the bond issuer promises to pay back to the bondholder when the bond matures. It is also known as the par value or principal amount of the bond.
What is it called when a bond is selling for less than its face value?
A bond selling for less than its face value is classified as being sold at a discount. A bond can sell at a discount if interest rates increase or if the repayment ability of the bond issuer becomes questionable due to a reduction in the credit rating of the issuer.
What is the future value of 1200 a year for 40 years at 8 percent interest?
What is the future value of $1,200 a year for 40 years at 8 percent interest? Assume annual compounding.
What is the future value for 10000 invested for 5 years with an annual interest rate of 8 percent?
$14,693.28
What is the future value of 10000 for an interest rate of 16 percent and 1 annual period of compounding?
With only one year the value is 11600
When is a bond's per value generally repaid?
A bond's face value is typically repaid to the bondholder at maturity. This represents the principal amount borrowed by the issuer, which is returned to investors along with any final interest payments.
