Difference between revisions of "Calculate Bond Discount Rate"
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A bond discount is the difference between the face value of a bond and the price for which it sells. The face value, or par value, of a bond is the principal due when the bond matures. Bonds are sold at a discount when the market interest rate exceeds the coupon rate of the bond<ref name="rf1">http://www.investopedia.com/terms/b/bond-discount.asp</ref>. In order to calculate how the amount of the bond discount, you need to need to calculate the present value of the principal and the present value of the coupon payments. | A bond discount is the difference between the face value of a bond and the price for which it sells. The face value, or par value, of a bond is the principal due when the bond matures. Bonds are sold at a discount when the market interest rate exceeds the coupon rate of the bond<ref name="rf1">http://www.investopedia.com/terms/b/bond-discount.asp</ref>. In order to calculate how the amount of the bond discount, you need to need to calculate the present value of the principal and the present value of the coupon payments. | ||
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== Steps == | == Steps == | ||
=== Calculating the Present Value of the Bond’s Principal === | === Calculating the Present Value of the Bond’s Principal === | ||
