What is a par coupon bond?
Robert Miller
Updated on February 10, 2026
A par bond refers to a bond that currently trades at its face value. The bond comes with a coupon rate. that is identical to the market interest rate.
What is the semiannual coupon payment for a 10% bond with a $1000 par?
Most bonds pay interest semi-annually, which means bondholders receive two payments each year. 1 So with a $1,000 face value bond that has a 10% semi-annual coupon, you would receive $50 (5% x $1,000) twice per year for the next 10 years.
When a bond is sold at par?
When a company issues a new bond, if it receives the face value of the security the bond is said to have been issued at par. If the issuer receives less than the face value for the security, it is issued at a discount.
Are bonds called at par?
After a year, the call price might decline to 101. After another year, it might decline to 100, or par, and remain callable at par for the remainder of its life. Issuers call bonds when interest rates drop below where they were when the bond was issued.
How does coupon rate affect par value of Bond?
The coupon rate of a bond as compared to the interest rates in the economy determines whether a bond will trade at par, below par, or above its par value. The coupon rate is the interest payments that are made to bondholders, annually or semi-annually, as compensation for loaning the issuer a given amount of money.
What’s the par value of a municipal bond?
On the bond’s maturity date, both of the investors will be repaid $1,000 par value of the bond. While the par value of a corporate bond is usually stated as either $100 or $1,000, municipal bonds have par values of $5,000 and federal bonds often have $10,000 par values.
How is the face value of a bond calculated?
Face/par value which is the amount of money the bond holder expects to receive from the issuer at the maturity date as agreed. Coupon rate is the annual rate of return the bond generates expressed as a percentage from the bond’s par value. Coupon rate compounding frequency that can be Annually, Semi-annually, Quarterly si Monthly.
When to sell a bond at a discount?
IF c <> r AND Bond price < F then the bond should be selling at a discount. Let’s assume that someone holds for a period of 10 years a bond with a face value of $100,000, with a coupon rate of 7% compounded semi-annually, while similar bonds on the market offer a rate of return of 6.5%.
