The bond discount is the difference between a bond's current market price and its higher face value or maturity value. This phenomenon occurs when bonds are issued below par value or due to market conditions such as rising interest rates or heightened default risk.
In finance, a point has different implications depending on whether it is used in relation to bonds, real estate, commercial lending, or stocks. Understanding these distinctions is crucial for comprehending various financial metrics and transactions.
Reset bonds are bonds issued with a provision that on specified dates, the initial interest rate must be adjusted so that the bonds trade at their original value.
Simple yield is the return equal to the nominal dollar interest divided by the market value (price) of a bond. It is an approximate, simplified rate reflecting the cost to the debtor and the return to the holder of a debt instrument.
