A bond carries a specific rate of interest which is also called the Coupon Rate.
For example, if the Face Value of the bond is Rs 100 and the bond is issued at 8% coupon rate, the Interest would be calculated on the Face Value of the bond. That is, annual interest would be
Rs 100 x 8% = Rs 8 per annum.
Generally, the bonds may be issued or traded at a Par (Face Value), at a premium or at a discount to Face Value.
Interest paid would be tax deductible for the issuer.
For example, if the Face Value of the bond is Rs 100 and the bond is issued at 8% coupon rate, the Interest would be calculated on the Face Value of the bond. That is, annual interest would be
Rs 100 x 8% = Rs 8 per annum.
Generally, the bonds may be issued or traded at a Par (Face Value), at a premium or at a discount to Face Value.
Interest paid would be tax deductible for the issuer.
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