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Norminal value vs market price

+1 vote
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asked Feb 20 in BUS 1003H - Introduction to Financial Risk by Shivambe

If an organisation issues a bond with a norminal price of x but the market price of the bond is y  which is not equal to x.. which value do we use to calculate the coupon payments?

1 Answer

+1 vote
answered Feb 20 by Brandon Michaels (160 points)
All calculations of coupon payments are done using the nominal price of the bond. The nominal price is decided at the time when the bond is issued. This means that all future coupon payments are known from the outset, and doesn't fluctuate with market prices. 
commented Feb 22 by Tintswalo (130 points)

seems reasonable. thnx :)!

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