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Bond trading?


Hi i was wondering if someone could explain to me bonds and trading. If you purchase a bond at $950 and the face value is $1000 and the coupon is for 10% are you getting $95 in interest or $100 in interest? Also, How would you calculate a good bond to buy using the YTM calculation?

You just bought a $1,000 at a discount of $50. The discount normally occurs if other bonds are paying a higher rate. You get 10% of the face value ($1,000) interest during the life of the bond.

You are getting paid 10.53% on the discounted note.

The YTM calculation factors in the $50 discount as part of your return.

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