Key Components of Bonds

1. Face Value (Par Value): Face value, or par value, is the amount the issuer promises to pay the bondholder at maturity. 2. Coupon Rate: The coupon rate is the rate of interest the issuer agrees to pay to the bondholder, expressed usually as a percent of the face value. For example, with a 5% coupon on a $1,000 bond, interest of $50 can be expected each year. The coupon may be paid off at regular intervals, such as annually or semi-annually.