Question

What elements of a bond do not change? Why not?

What elements of a bond do not change? Why not?

Homework Answers

Answer #1

Face value and interest rate on bond do not change.

Because bond is the instrument used by corporate or government to raise funds. So amount raised by them is fixed which is divided into smaller amount unit known as face value, which cannot be changed. Also at the date of issue of bond, coupon rate or interest rate stated.It is the promise by issuer to the investor that it will pay interest over the period of time. If issuer not able to serve the coupon rate then investor can take legal action to get back their money.

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