Instruction And lesson About Stock Market - How Understanding Price and Yield Bonds

How Understanding Price and Yield Bonds

Understanding the bond price is a bit different from the stock. When stock prices are expressed in the form of currency, then the bond price is usually expressed as a percentage (%), the percentage of the nominal value.

There are 3 (three) possible market price of the bonds offered, namely: (1) Par (score Pari), where the bond price equal to the nominal value (eg: bonds with a nominal value of USD 50 million sold at 100%, the bond's value it is 100% x Rp 50 million = USD 50 million); (2) at a premium (the premium), the bond price is greater than the nominal value (eg: bonds with a nominal value of Rp 50 million sold at a price of 102%, then the value bonds is 102% x Rp 50 million = USD 51 million); (3) at discount (with Discount), the bond price is less than the nominal value (eg: bonds with a nominal value of USD 50 million are sold at 98%, then the value of the bonds is 98% x Rp 50 million = USD 49 million).

Meanwhile, revenue or yield or return that would be obtained from the investment expressed as a yield bonds, the results would be obtained if the investors put their funds to buy bonds.

In general, before deciding to invest in bonds, investors should consider the amount of bond yield, as a factor measuring the annual returns will be accepted.

There are 2 (two) terms in the determination of the yield Current Yield and Yield To Maturity. Currrent yield is the yield calculated based on the number received coupons for a year on the price of these bonds.

Meanwhile, Yield To Maturity (YTM) is the rate of return or income that would be obtained if the investor has a bond until maturity