Summary
Bond Price represents the current market value of a bond. It is the amount investors are willing to pay to buy the bond in the secondary market.
Bond prices may trade above or below their face value.
Why it matters
Bond prices directly affect returns and yields. When a bond’s price changes, its yield also changes.
Bond prices can be influenced by interest rates, credit risk, investor demand, maturity, and market liquidity.
How to read it
A bond trading above its face value is said to be trading at a premium. A bond trading below its face value is said to be trading at a discount.
Investors should review price together with Yield to Maturity and coupon to understand return potential.