DEFINITION of 'Above Par'
A term used to describe the price of a security when it is trading above its face value. A security usually trades at above par when its income distributions are higher than those of other instruments currently available in the market.
If an investor purchases a security above face value, he or she will incur a capital loss at maturity when it is redeemed for face value.
BREAKING DOWN 'Above Par'
For example, a 5year bond with $1,000 face value that pays a coupon of 10% annually may trade closer to $1,168 if similar bond rates decline to 6%. This is because investors are willing to pay more for a higher coupon; thus, it is said to be trading above par.
In order to make its yield equal current market rates, the bond should trade at its present value.
In the above example, the following calculation was used to determine the theoretical price the bond would trade at
N = 5 years
I/Y = 6 (market rate, 6%)
FV = $1,000 (face value)
PMT = $100 (10% coupon)
Payments/Year = 1 (annual coupon payment)

At Par
A term that refers to a bond, preferred stock or other debt obligation ... 
Face Value
The nominal value or dollar value of a security stated by the ... 
Par
Short for "par value," par can refer to bonds, preferred stock, ... 
Pull To Par
The movement of a bond's price toward its face value as it approaches ... 
ZeroCoupon Bond
A debt security that doesn't pay interest (a coupon) but is traded ... 
Current Price
The "real time" price of a security trading on an exchange, as ...

Bonds & Fixed Income
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Bonds & Fixed Income
Are Bonds Selling At A Premium A Good Investment?
A bond with a par value â€“ or face value  of $1,000 is selling at a premium when its price exceeds par. 
Bonds & Fixed Income
Simple Math for FixedCoupon Corporate Bonds
A guide to help to understand the simple math behind fixedcoupon corporate bonds. 
Investing Basics
Explaining the Coupon Rate
Coupon rate is the stated interest rate on a fixed income security. 
Bonds & Fixed Income
Advanced Bond Concepts: Yield and Bond Price
In the last section of this tutorial, we touched on the concept of required yield. In this section we'll explain what this means and take a closer look into how various yields are calculated. ... 
Bonds & Fixed Income
Using Excel PV Function to compute Bonds PV
To determine the value of a bond today  for a fixed principal (par value) to be repaid in the future at any predetermined time  we can use an Excel spreadsheet. 
Bonds & Fixed Income
Understanding Bond Prices and Yields
Understanding this relationship can help an investor in any market. 
Bonds & Fixed Income
How Bond Prices and Yields Work
Understanding bond prices and yields can help any investor in any market. 
Investing
Understanding the Different Types of Bond Yields
Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment. 
Bonds & Fixed Income
The Basics Of Bonds
Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.

Should investors focus more on the current yield or face value of a bond?
Find out when investors should focus on a bond's current yield versus its face value, including an example of how current ... Read Answer >> 
What types of fees apply to checking accounts?
Learn about the difference between a bond's coupon rate and its yield to maturity, and how the par value, coupon rate and ... Read Answer >> 
Can the marginal propensity to consume ever be negative?
Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the basic components of bonds and how ... Read Answer >> 
What is the most common solvency ratios used in fundamental analysis?
Learn about the difference between a bond's coupon rate and its yield rate, how the coupon rate influences market price and ... Read Answer >> 
What is the difference between yield to maturity and the coupon rate?
Read about some of the basic differences between a debt security's coupon rate and its yield to maturity, and learn which ... Read Answer >> 
How do debit spreads impact the trading of options?
Find out what it means when a bond has a coupon rate of zero and how a bond's coupon rate and par value affect its selling ... Read Answer >>