What is the Discounted Price and the Premium Price?
When a bond is traded in the market, its price can diverge from its par value (the value at which it was originally issued by the issuer).
Discounted Price: If the bond's market price falls below its par value, it is said to be trading at a discounted price. This means investors can purchase the bond for less than its face value.
Premium Price: Conversely, if the bond's market price rises above its par value, it is trading at a premium price. In this case, investors pay more than the face value of the bond to acquire it.
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