Unformatted text preview: minal value stated on the bond. Par value represents the amount of principal per bond that the corporation agrees to repay when the bond matures. For most corporate bonds, the par value is $1,000, but it can be any multiple of $1,000. The typical way of quoting the market value (price) of a bond is as a percent of its par value. For example, a bond with a par value of $1,000 trading at $1,020 which means 102 percent of par.
23 Characteristics of Bond 24
24 Characteristics of Bond Par Value
The par value is not necessarily equal to the bond’s market value or price. The price of a bond may rise above or fall below its par value due to differences between its coupon rate (the interest rate stated on a bond when it's issued) and prevailing market interest rates. The market interest rate will be constantly changing due to global events, perceptions about inflation, and many other factors which occur both inside and outside of the corporation For example, if a bond has a face value of $1000 and a...
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