Listen to a Business English Dialogue About Below par
Skylar: Hi Arthur, have you heard the term “below par” in business and finance?
Arthur: Yes, Skylar. Below par refers to a bond trading at a price lower than its face value.
Skylar: Right, it means investors can purchase the bond for less than its original value.
Arthur: Exactly, below par bonds often have higher yields to compensate for the discount.
Skylar: It’s interesting how below par bonds can be attractive to investors seeking higher returns.
Arthur: Yes, they offer the potential for capital appreciation if the bond’s price increases over time.
Skylar: And below par bonds may indicate financial distress or uncertainty about the issuer’s creditworthiness.
Arthur: Absolutely, investors should carefully evaluate the risks associated with below par bonds before investing.
Skylar: It’s important to consider factors like the issuer’s financial health, market conditions, and interest rate environment.
Arthur: Right, and investors should diversify their portfolios to mitigate risks associated with individual bonds.
Skylar: Overall, below par bonds offer opportunities for investors to potentially earn higher returns, but they also come with increased risks.
Arthur: Indeed, understanding the implications of investing in below par bonds is essential for making informed investment decisions.