dear Sir
if a country has a high risk of inflation do we want a premium (more to pay at the end) or discount(less to pay at the end) on a bond if we are issuing the bond?
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Bond premium and discount
7y ago#1It depends whether the investor wants high income or high capital growth.
If they want capital growth then they will prefer a premium on redemption.
Thank you...and for the issuer in a high inflation environment??
7y ago#3They will want to pay a premium on redemption. It will mean they can pay lower interest during the life of the bond, and given their earnings will have inflated it will be easier for them to pay the premium at the end.
Great, thank you very much
7y ago#5You are welcome :-)
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