What Is a Bond?
The borrower pays it back with interest; the issuer can be a company or a government.
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1.What is a bond?
The borrower pays it back with interest; the issuer can be a company or a government.
2.A 1,000 bond pays a 40 coupon, which is what percent?
The coupon is the yearly interest.
3.Market rates rise to 6 percent. What happens to the price of the old 4 percent bond?
The old bond has to become cheaper so its return matches what new bonds offer.
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Sources (4)
- FINRA: Bonds (Investor Education, finra.org/investors/investing/investment-products/bonds)
- Fidelity Learning Center: Bond ratings
- SEC Office of Investor Education and Advocacy: Investor Bulletins "The ABCs of Credit Ratings"
- Eigene Rechnung: Anleihe 1.000 / 4 % / zehn Jahre, Marktzins 6 %; Inflationsrueckruf (Uebungsaufgabe)
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