At Par

Definition of 'At Par'


A term that refers to a bond, preferred stock or other debt obligation that is trading at its face value. The term "at par" is most commonly used with bonds.

A bond that trades at par will have a yield equal to its coupon, and investors will expect a return equal to the coupon for the risk of lending to the bond issuer. Bonds are quoted at 100 when trading at par.

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.



comments powered by Disqus
Hot Definitions
  1. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  2. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  3. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  4. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
  5. Family Limited Partnership - FLP

    A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
  6. Yield Burning

    The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.
Trading Center