2006-09-19 14:08:25 · 7 answers · asked by Gillberg4 1 in Business & Finance ➔ Investing
Yes. Most of the other answers seemed to have been made up without a lot of thought.
You would pay more than the face value of a bond if the coupon rate (interest rate) was higher than the current market rate.
That price would give you a yield to maturity comparable to the comparable yield in the market.
Use a financial calculator or excel spreadsheet with the "PV" function and use this as an example with a bond that makes annual coupon payments of 6% for simplicity:
FV=-1000
I=3.77%
N=5
PMT=60
PV= ?
Solve for PV and you will get $1100. It would make sense if the market interest rate on similar bonds was 3.77% and the coupon rate was 6%. This is just one example, but there answers like this for any market interest rate.
2006-09-19 14:24:13 · answer #1 · answered by Mr. Economist 2 · 2⤊ 1⤋
absolutely...as long as the annual yield is on the coupons is sufficent to cover the amount you paid above the initial price of the bond.
2006-09-19 16:44:46 · answer #2 · answered by simi-guy 2 · 0⤊ 0⤋
Well, if it still has several redeemable coupons, and the interest will add up to over $100.00 when you redeem them, then yes, it would make sense.
2006-09-19 14:11:46 · answer #3 · answered by MOM KNOWS EVERYTHING 7 · 0⤊ 0⤋
Yes, if it would be worth more that 1100 in the future.
2006-09-19 14:10:22 · answer #4 · answered by thesweetestthings24 5 · 0⤊ 1⤋
Only to someone with your level of intellect.
2006-09-19 14:09:38 · answer #5 · answered by greeneyedprincess 6 · 0⤊ 2⤋
nope, total scam
2006-09-19 14:10:03 · answer #6 · answered by mrs michelle 4 · 0⤊ 1⤋
Hell 2 da **** Na!!!!!
2006-09-19 14:10:04 · answer #7 · answered by Ms. Understood 1 · 0⤊ 1⤋