Every investor wants to get the best deal for their money. That’s why the concept of “how to calculate discount in bond” is a crucial part of any investor’s toolkit. When you buy a bond at a discount, you’re essentially buying it for less than its face value. This can save you money in the long run, as you’ll receive interest payments on the full face value of the bond, even though you paid less for it.
Calculating the discount on a bond is relatively simple. You simply need to know the bond’s face value, current market price, and coupon rate. The formula for calculating the discount is as follows: