spartanag07

thanks sumz… always get confused….
And I think I have messed up in relation to the directional stuff as well.
right, what I have written in terms of the interest rates is related to a premium bond.
In a discount bond - YTM would be 7%, Coupon 6%, e.g.
PAR * Coupon = 1000 * 6% = 60
Face * Coupon = 900 * 7% = 63
And 3$ would be the Bond Discount Amortization. (which gets added to Interest income).
For a premium Bond:
Face=1100, Par=1000
YTM=5%, Coupon=6%
Par * Coupon= 60
Face* YTM=55
Subtract 5$ as Bond Premium Amortization (reduces Interest Income).