Non Government Debt Securities – General Aspects
Price of a Bond
The price of a bond is the present value of future interest payments (an annuity) plus the present value of the maturity (face) value at its yield rate (rate to maturity). There is an inverse relationship between the yield rate and selling price (present value). The higher the yield rate, the lower the present value (selling price); the lower the yield rate, the higher the present value (selling price).