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What are the different types of cash flow to the bondholder of coupon bonds?

Coupon bonds deliver two different kinds of cash flow to the bondholder are as follows:

a. Face value: at the end of the lifetime bond, the issuer repays the face value of the bond to holder. The face value is also termed as par value or principal.

b. Coupon payments: regular (frequently semi-yearly) payments of cash to the bondholder. Such payments are usually a fixed fraction of the face value. The interest rate is the borrowing cost or the price paid for the rental of funds (generally expressed by a percentage).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9581251

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