 |
Investopedia explains 'At Par'
Due to ever-changing interest rates, financial instruments almost never trade exactly at par. A bond will likely not trade at par when interest rates are above or below its coupon rate.
For example, if a company issues a bond with a 5% coupon and interest rates increase to 10%, investors will pay less than par for the bond to compensate them for the difference in rates. In the same vein, if interest rates drop, investors will be willing to pay more than par for the bond.
|