rkapoor

mbolzicco Wrote:
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> The coupon is a percentage of face. When the bond
> is priced at 98 you use the reference rate for
> face is 100. The same identical bond can be
> priced using 1000 as the reference rate for face,
> except quoted as 980.
>
>
> Both the bonds are trading at a discount. Both
> can offer a 2% coupon semi-annually. One will be
> a coupon of $2, the other a coupon of $20.


Sorry Matt. Gotta point out an slight mistake in your post. Bond prices are always quoted as a percentage of par. So a price quote of 98 doesn't necessarily mean that the face is 100.

You could have a bond with a par value of $5,000 which could be 'worth' $4,900, but it would still be 'quoted' at 98.