# Par

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## Definition of 'Par'

Par value, also known as face value, is the original value of a bond or other security. It is the amount that will be repaid to the bondholder when the bond matures. The par value of a bond is usually $1,000, but it can be any amount.

The par value of a bond is important because it determines the bond's yield. The yield is the annual interest rate that the bondholder will receive. The yield is calculated by dividing the annual interest payment by the par value of the bond.

For example, if a bond has a par value of $1,000 and pays an annual interest payment of $100, the yield is 10%.

The par value of a bond is also important because it determines the bond's price. The price of a bond is the amount that an investor is willing to pay for the bond. The price of a bond is usually close to the par value, but it can be higher or lower.

The price of a bond will be higher than the par value if the bond is trading at a premium. A premium occurs when the market interest rate is lower than the bond's coupon rate.

The price of a bond will be lower than the par value if the bond is trading at a discount. A discount occurs when the market interest rate is higher than the bond's coupon rate.

The par value of a bond is an important concept to understand for anyone who is interested in investing in bonds.

The par value of a bond is important because it determines the bond's yield. The yield is the annual interest rate that the bondholder will receive. The yield is calculated by dividing the annual interest payment by the par value of the bond.

For example, if a bond has a par value of $1,000 and pays an annual interest payment of $100, the yield is 10%.

The par value of a bond is also important because it determines the bond's price. The price of a bond is the amount that an investor is willing to pay for the bond. The price of a bond is usually close to the par value, but it can be higher or lower.

The price of a bond will be higher than the par value if the bond is trading at a premium. A premium occurs when the market interest rate is lower than the bond's coupon rate.

The price of a bond will be lower than the par value if the bond is trading at a discount. A discount occurs when the market interest rate is higher than the bond's coupon rate.

The par value of a bond is an important concept to understand for anyone who is interested in investing in bonds.

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Copyright © 2004-2023, MyPivots. All rights reserved.