The AI (ChatGPT) Bond Investing Handbook: Par Value of Bond

Here is the response from ChatGPT for the prompt bonds par entered on February 17, 2023.

In finance, the term "par" refers to the face value of a bond. The par value, also known as the principal amount or the face value, is the amount of money that the issuer of the bond agrees to repay the bondholder when the bond matures.

For example, if a bond has a par value of $1,000, this means that the bond issuer has agreed to repay the bondholder $1,000 when the bond matures. The par value is typically the price at which the bond is issued, and it is used to calculate the bond's coupon payments, which are the periodic interest payments made to the bondholder.

It's important to note that the market price of a bond can be different from its par value. This is because the market price of a bond is determined by supply and demand in the market, as well as other factors such as changes in interest rates and the creditworthiness of the bond issuer. If the market price of a bond is higher than its par value, it is said to be trading at a premium, and if the market price is lower than its par value, it is said to be trading at a discount.

Bond Trading at a Premium Bond Trading at a Discount