# Value of a Bond

**Value of a Bond**

It is defined to be the present worth of all the amounts the bondholder will receive through his possession of the bond.

*The bondholder will receive two types of payments which are:*

1. Single payment which the owner will receive at the date of maturity of the bond, which is usually equal to the par value of the bond; and

2. The periodic payments for interest on the bond usually it is redeemed by the issuing corporations.

**Formula for value of a bond:**

Where*Vn = value of the bond n periods before redemption
F = par value of the bond
C = amount paid to the bondholder at maturity of the bond which is usually equal to F
n = number of periods prior to redemption
r = rate of interest on the bond per period
i = actual rate of interest on the amount invested in the bond usually called yield.*

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