In the secondary market, bond prices are almost always different from par, because interest rates change continuously. Sometimes when the demand is higher or lower than an issuer expected, the bonds might sell higher or lower than par. The par value is the principal, which is received at the end of the bond's term, i.e., at maturity. Most corporate bonds, for instance, have a face and par value of $1,000. When a bond is first issued, it is generally sold at par, which is the face value of the bond. The other factors that determine the price of a bond have a more complex interaction. A change in the credit rating of the issuer will affect the price of its bonds in the secondary market: a higher credit rating will increase the price, while a lower rating will decrease the price. The higher the credit rating of the issuer, the lower the yield that it must offer to sell its bonds. Generally, the issuer sets the price and the yield of the bond so that it will sell enough bonds to supply the amount that it desires. Bond Pricing and Accrued Interest, Illustrated with Examples › Money › Bonds Bond Pricing
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