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).
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Sajida Gul
Yes.
according to the come rates the returns we get if we purchase higher rated coupon bonds we get higher returns
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.
The advantage of buying zero-coupon bonds is that when they reach maturity, the investor then receives the full face value of the bond. These bonds became popular in the 1980's even though they were first released in the 1960's.
Coupon rates are likely to vary when they are being traded in different markets with different interest rates. There will also be a variation in rates due to the different risk levels of of different bonds.
The molecule is polar because there are slightly polar bonds and the net dipole moment is nonzero (Mastering Chemistry, Pearson Education:2010)
Yes.
according to the come rates the returns we get if we purchase higher rated coupon bonds we get higher returns
Not all bonds pay out interest through coupon payments.
When the yield of a bond exceeds it coupon rate, the price will be below 'par' which is usually $100.
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.
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The difference between the coupon rate and the required return of a bond is dependent upon the type of bond. Junk bonds will have the biggest difference between its return and the coupon rate.
The advantage of buying zero-coupon bonds is that when they reach maturity, the investor then receives the full face value of the bond. These bonds became popular in the 1980's even though they were first released in the 1960's.
1,111.50 (Annual coupon)
Many zero-coupon bonds (e.g. US Treasuries) penalize for early redemption through forfeiture of interest for a specified period of time.
Zero Coupon Municipal Bonds are special because, unlike other bonds, they have no periodic interest payments. Rather, the investor receives one payment at maturity. This payment is equal to the amount invested, plus the interest earned, compounded semiannually.