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Terms of Bond

terms of bond


 Lets Start with an Example -



Example : let's say you bought the bond for 2000 at 10% interest rate for 10 years.


Face value


                     when the company issues the bond, that price of the bond would be knows as face value. for example , let's the price of the bond be 1000 and you sell that bond to the public, that price of the bond would be knows as face value or  the price which is printed on the Stock certificate. As in the above example 2000 is the face value.

 

Coupon rate :


                           when the company gives you an interest rate for the bond which you bought would be the coupon rate. As in the above example the 10% would be coupon rate.

 

Maturity date : 


                            It is the date where your agreement of the bond get closed or gets over.As in the above example the 10 years i.e 2018 - 2028 then 2028 will be the maturity date.



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