Listen to a Business English Dialogue About Par bond
Ava: Hey Nora, have you ever heard of a par bond in finance?
Nora: No, what’s that?
Ava: A par bond is a bond that is issued at its face value, usually $1,000, and pays interest at a fixed rate until maturity.
Nora: Oh, I see. So, investors receive interest payments periodically and get the full face value of the bond back when it matures?
Ava: Exactly. Par bonds are considered less risky because they’re issued at face value, unlike premium or discount bonds.
Nora: Are there any advantages to investing in par bonds?
Ava: Well, par bonds provide a predictable stream of income for investors and are relatively easy to understand compared to other types of bonds.
Nora: That sounds like a straightforward investment option for those looking for stability.
Ava: Yes, exactly. Par bonds are often favored by conservative investors seeking steady income.
Nora: What factors determine the interest rate on a par bond?
Ava: The interest rate is usually determined by prevailing market rates and the creditworthiness of the issuer.
Nora: Ah, so investors should consider both the interest rate and the credit risk when evaluating par bonds.
Ava: Absolutely. It’s important to assess the issuer’s financial health and market conditions before investing.
Nora: Thanks for explaining, Ava. Par bonds seem like a reliable option for investors seeking steady returns.
Ava: No problem, Nora. It’s essential to understand different investment options to make informed decisions.