Answer:
Bond market values are expressed as a percentage of their par (face) value. For example, a company's bonds might be trading at 103, meaning that they can be bought or sold for <u>103%</u> of their par value.
Explanation:
The price of a bond is compared to the face value of the bond and then described in the value to show the market impact on the bond.
The bond can be traded as follow
At Par or at 100
At par or at 100 means the bond is trading same the value equals to the face value of the bond. e.g. it the face value of a bond is $1,000 then this bond is Trading at $1,000 ( $1,000 x 100% ).
At Premium or Value>Face value
Bond trading at a premium has a market value higher than its face value. The bond is trading at 103 means it is trading at 3% higher than its face value. e.g A bond with a face value of $1,000 trading at 103 will have value of $1,030 ( $1,000 x 103% ).
At Discount or Value<Face value
Bond trading at a discount has a market value lower than its face value. The bond is trading at 97 means it is trading at 3% less than its face value. e.g A bond with a face value of $1,000 trading at 97 will have value of $970 ( $1,000 x 97% ).
