What is the price of a bond?

It is a price at which the underwriting syndicate of a debt issue resells the bonds to public investors for the issuing firm. Bonds can be priced at a premium, discount, or at par.

If the bond's price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates. If the bond's price is lower than its par value, the bond will sell at a discount because its interest rate is lower than current prevailing interest rates.

When considering the price of a bond, it is the maximum price one would want to pay for the bond, given the bond's coupon rate in comparison to the average rate most investors are currently receiving in the bond market.

Last updated July 2, 2020