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Hi Sir
What does it mean to be trading at par?
the book says when redeemable bonds are traded at par the formula for irredeemable bonds can be used to calculate the cost of debt. When will I recognize whether a redeemable bond is trading at par.
thanks
A question will tell you – it will say “…redeemable bonds that are traded at par …” or something very similar
(I don’t remember ever seeing this in an F7 exam question – but that may simply be my poor memory)
‘Par’ is another way of saying ‘face value’ so a $1 preference share issued at par would be issued in exchange for $1
A redeemable bond traded at par is one that is bought and sold for its face (par) value
OK?
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