Asked by
Sheila Borbe
on Nov 13, 2024
Verified
The price of a bond is equal to the sum of the interest payments and the face amount of the bonds.
Face Amount
The face amount is the value of a financial instrument, such as a bond or life insurance policy, as stated on the instrument itself.
Interest Payments
Payments made periodically, often annually or semi-annually, as compensation for borrowing money, calculated as a percentage of the total amount borrowed.
Bond Price
The market price for which a bond is bought or sold, influenced by interest rates, credit quality, and maturity.
- Learn the association between the interest rates prevailing in the market and the cost of bonds.
Verified Answer
PJ
Learning Objectives
- Learn the association between the interest rates prevailing in the market and the cost of bonds.