How much is par?

In addition to the face value, a bond also offers coupon payments to its holders. These payments are made annually or semi-annually and are owed by the issuer of the debt. The coupon payments serve as an incentive for investors to purchase bonds, as they provide a steady stream of income.

The coupon rate determines the amount of interest payments that a bondholder will receive. For instance, a bond with a par value of $1,000 and a coupon rate of 4% will have annual interest payments of $40. This calculation is straightforward, involving only multiplication of the par value by the coupon rate.

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A bond's par value holds significant importance in the financial market. It represents the face value of the bond, which is the principal amount that the issuer owes to the bondholder. This value is crucial as it forms the basis for various financial calculations and transactions.

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