Bonds at a Discount or Premium: Accreting and Amortising to Par
This lesson is part of the course
In this lesson
You find the effective rate of a bond bought below par and one bought above par, build the discount bond's schedule up to par and see why the premium bond earns less than its coupon.
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Lessons in this course
- Why Effective Interest: Coupon, Fees and Straight-Line Spreading Locked
- The Effective Interest Rate: IRR of All Cash Flows, Annualised with POWER Locked
- The Lender's Schedule: Carrying Amount × EIR = Interest Income Locked
- Bonds at a Discount or Premium: Accreting and Amortising to Par Locked
- The Borrower's Side: Transaction Costs, Interest Expense and the Liability Locked
- Zero-Coupon and Step-Up Instruments: No or Rising Coupons, One Smooth Rate Locked
- Changed Expected Cash Flows: Recalculated Carrying Amount & Catch-Up Adjustment Locked
- Journal Entries & Roll-Forward: Opening, Interest, Cash, Closing Locked