An explanation of few terms related to Bonds you may hear everyday
A) Par value or Face value or Principle:
It is the value mentioned on bond say 1000 rs, or the value holder of the bond (The one who purchased it) will receive when bond matures.
B) Coupon rate: Interest rate promised on 1000 rupees when the bond was purchased. Interest can be promised annually, quarterly etc.
C) Bond selling at premium: If someone is purchasing the 1000 rs bond at 1000+ rs (say 1500), the bond is selling at premium.
D) Bond selling at discount : If someone purchases same 1000 rs bond at 1000– rs (Say 500), bond is selling at discount.