Question

In: Accounting

- what is the interest rate? - what is the bond price ? - what is...

- what is the interest rate?
- what is the bond price ?
- what is the diffrences between them?

Solutions

Expert Solution

Interest rate is the rate on the Face value of the Bond which is paid periodically to the bond holders untill the maturity of the bond.

Bond Price is the value at which the bond is issue to it's bond holders. In other words it is cash received on the issuance of bond. Bond Price is the present value of the interest payment and maturity value.

Bond Price is the cash received at the time of issuance whereas interest rate is charged on the Face value paid to bond holders periodically.

ekkarill92 answered 2 years ago
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