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Sir
suppose a company adverts
X plc 8% bonds 2020 $90 pc
I lend $10,000 to this company today
so, I’ll be getting $8 every year until I get repaid
2016-2019 $8*4years = $32 interest
2020 $10,000
clear me if above ans are wrong
my question is
will I get interest in 2015 and 2020 also sir?
and what is this $90 mv above ?sir
so market value is the price we actually pay for the bonds
by my scenario above
means I will get 100 units of certificate and I’ll have to pay $9000?clear me if I’m wrong John
The bonds have a nominal value of $100.
The market value is $90 per bond (i.e. $90 for every $100 nominal). That is what the ‘pc’ means (per cent) although you would assume the same even when ‘pc’ is not written.
The free lecture on the valuation of securities will help you – I mention this point within the lecture.
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