Bond Terminology Flashcards
1
Q
Face Value/ Maturity Value/ Par Value
A
Face Value is the amount of principal that will be paid to the bondholder at maturity.
2
Q
Coupon Rate
A
the coupon rate is the amount that will be paid annually in interest for the years that the bond is held before maturity.
3
Q
Coupon Payments
A
coupon payments are payments that made from the face value at the coupon rate.
4
Q
Effective Rate of Interest/ Yield to Maturity
A
is the complete PV of the bond if held to maturity. This is a representation of all the future cash flows and final payout brought back to PV.
5
Q
Balance Sheet Liability of a Bond
A
A bond’s balance sheet liability is the PV of the resulting YTM for the note.
6
Q
Interest Expense
A
You will multiply the (YTM)*(PV of the bond)
