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How much is raised from Government bonds

  • 26-11-2013 11:55am
    #1
    DylanII
    Closed Accounts Posts: 1,102 ✭✭✭


    Hi,

    I just wanted to check that I was correct on this.

    Suppose the National Treasury Management Agency issued a 3 month bond for 5% with a face value of €1000 and another also with a face value of €1000 but this one has a 10% interest rate.

    If trying to find out how much they raised from the sale of the bond would it simply be the face value with no regards to the interest rate?


Comments

  • #2
    roro2
    Registered Users, Registered Users 2 Posts: 412 ✭✭roro2


    Yes, provided they were both issued at par (issued at the same price as the face value).

    But, in your example, if the 2 bonds are exactly the same except for the coupon (interest rate) and issued at the same time, the higher coupon bond will issue at above par because of the higher coupon (or at a higher price than the other bond anyway), e.g. it might raise €101 for every €100 of face value.


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