The amount of each interest payment is $50.
What is the par value and coupon rate of a bond?
The value of a bond is calculated when a bond or debenture has a maturity date by using the present value principle to account for the annual interest payments in addition to the bond's terminal value.
By comparing the present value of a bond with its current market value, one may determine if it is overvalued or undervalued.
Even though bonds are required to make constant Re interest payments until maturity, I, and pay a certain principal amount, P, at maturity, I, the number of years to maturity N and the required rate of interest I are subject to vary.
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