This article provides a brief introduction to the duration measure for bonds. The duration measure for bonds is a invention that allows bonds of different maturities and coupon rates to be compared directly. Everyone knows that the maturity of a bond is the amount of time left until it matures. Most people also know that
How to Amortize a Bond The IRS requires investors who purchase certain bonds at a premium (i.e., above par, which means above face value) to amortize that premium over the life of the bond. The reason is fairly straightforward. If you bought a bond at 101 and were redeemed at 100, that sounds like a
What Are Bonds? A bond is just an organization’s IOU; i.e., a promise to repay a sum of money at a certain interest rate and over a certain period of time. In other words, a bond is a debt instrument. Other common terms for these debt instruments are notes and debentures. Most bonds pay a