Investing In Bonds For A Secured Future

Advertisements

2. After Investing

After investing, a par value, or the amount of money the investor receives after the maturity of the bond, is calculated. This means the amount (principal) owed should be returned to the investor. The coupon rate is the amount received by the bondholder as the percentage of the par value. Lastly, a maturity date is arrived at wherein the bond issuer needs to return the principal amount to the lender. To arrive at how much a bond would yield, one could divide the amount of interest paid over a year by the current price of the bond. Prices of bonds fluctuate; hence, the current price is always taken into consideration. However, if you decide to sell before the maturity date, it is advisable to do it at the current rate of the market.

Advertisements