Discounts, Premiums and Bonds at Par (Intermediate Financial Accounting Tutorial #12)

Before we moved onto valuing and reporting long term bonds I thought that I would provide a quick summary of bonds issued at a discount, premium or at par.

The stated rate is also known as the coupon rate, or face rate. The market rate is also known as the effective rate and is the rate at which you can get other very similar or identical financial instruments (for example, a bond may have been issued at a 4% coupon rate, 1 year later the market rate for those bonds might have shifted to 6%).

⌚ Timestamps
0:00 – Introduction
0:30 – Issuing a bond at par
1:10 – Issuing a bond at a premium
3:15 – Rule: bond trading at a discount
3:55 – Issuing a bond at a discount
5:00 – Rule: bond trading at a premium
5:35 – Rule: bond trading at par

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