Default bonds?

If not stated, do we assume: -semi-annual coupons -face value=maturity value=100 ?? I saw some slides say 1000, some say 100.

it really doesnt matter. just think of the price as % of face value (100 or 1,000 is your choice really if there is nothing in the exercise). regarding the payment of coupons, unless otherwise stated, assume semi-annual.

But doesn’t 2% semi-annual coupons at 100 face pays differently than 2% semi-annual coupons at 1000 face?

The coupon is a percentage of face. When the bond is priced at 98 you use the reference rate for face is 100. The same identical bond can be priced using 1000 as the reference rate for face, except quoted as 980. Both the bonds are trading at a discount. Both can offer a 2% coupon semi-annually. One will be a coupon of \$2, the other a coupon of \$20.

mbolzicco Wrote: ------------------------------------------------------- > The coupon is a percentage of face. When the bond > is priced at 98 you use the reference rate for > face is 100. The same identical bond can be > priced using 1000 as the reference rate for face, > except quoted as 980. > > > Both the bonds are trading at a discount. Both > can offer a 2% coupon semi-annually. One will be > a coupon of \$2, the other a coupon of \$20. Sorry Matt. Gotta point out an slight mistake in your post. Bond prices are always quoted as a percentage of par. So a price quote of 98 doesn’t necessarily mean that the face is 100. You could have a bond with a par value of \$5,000 which could be ‘worth’ \$4,900, but it would still be ‘quoted’ at 98.

I mean, if they don’t tell you what the face value is, do you assume it’s 100 or 1000?

i’d assume 1000 - even though I can’t think of when it could negatively effect your answer. 1000 or 100 is just a base point for the discount or premium figure…

bizzies4bankers Wrote: ------------------------------------------------------- > i’d assume 1000 - even though I can’t think of > when it could negatively effect your answer. 1000 > or 100 is just a base point for the discount or > premium figure… eg: You have a bond paying 2%. What’s Accumulated Value at t=1 of your coupons? You’d assume semi-annual coupons and face=X If face=100, that’s \$1/coupon If face=1000, that’s \$10/coupon

they are never NOT going to tell you that since you can get 2 different answers. it could be face 1 million dollars, 1,000 100 whatever, so they have to tell you.