Due to the constant fluctuations of interest rates, bonds and other financial instruments almost never trade exactly at par. A bond will not trade at par if current interest rates are above or below the bond’s coupon rate, which is the interest rate that it yields. A bond’s par value is its face value, the price that it was issued at. Over time, the bond’s price will change, due to changes in interest rates, credit ratings, and time to maturity. When this happens, a bond’s price will either be above its par value (above par) or below its par value (below par). Par value for common stock exists in an anachronistic form.
Which Other Prepositions Can Be Used Before ‘The Park?’
Both ‘in the park’ and ‘at the park’ are grammatically correct. ‘At the park’ means the person is at the area of the park. While ‘in the park’ means more than the person is enclosed within the park.
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Because of this you will sometimes find “on par with” used figuratively for other contexts even outside of headline style and golf. Below are examples of using ‘outside the park’ in a sentence. Below are examples of using ‘across the park’ in 3 types of accounting a sentence. The preposition ‘at’ regards a park or any place, as a point in space, like an ‘x’ on a map.
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It is more of a general location that the person’s current address is the park. A bond that trades at par has a yield equal to its coupon. Investors expect a return equal to the coupon for the risk of lending to the bond issuer. ‘Park’ is a common name for a place or a location which makes it compatible with most prepositions. Some of the other common prepositions we use are ‘by the park,’ ‘across the park,’ and ‘outside the park.’ Let’s explore what each means below.
Examples of par in a Sentence
So, if a person is ‘across the park,’ they are on the opposite side of where the park is. ‘By the park’ follows the meaning of the preposition ‘by,’ which means beside or in proximity to the park. So, if a person is ‘by the park,’ it means that the person is near or within the vicinity of the park. The preposition ‘in’ here sees the park or any place as containment or enclosure. In this case, ‘in’ would usually mean synonymous with ‘within’ or ‘inside.’ While this is easy to understand if the park was indoor, it may be a bit confusing for an outdoor park. In the context of an outdoor park, it considers the boundaries of the park.
The reason for a bond being issued at a price that is different than its par value has to do with current market interest rates. For example, if a bond’s yield is higher than market rates, then a bond will trade at a premium. Conversely, if a bond’s yield is below market rates, then it will trade at a discount to make it more attractive. These examples are programmatically compiled from various online sources to illustrate current usage of the word ‘par.’ Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors.
It can also mean inside a park if it is indoor or has an enclosure. The amount of the par value of a share of stock is printed on the face of a stock certificate. If the stock has no par value, then “no par value” is stated on the certificate instead. ‘Outside the park’ follows the meaning of the preposition ‘outside,’ which means out of the vicinity or the boundary how do you calculate the gain or loss when an asset is sold of a place. So, if a person is ‘outside the park,’ they are not within its boundary but out of it. ‘Across the park’ follows the meaning of the preposition ‘across,’ which means on the opposite side of a place.
- ‘In the park’ and ‘at the park’ are interchangeable depending on how specific or how general the context needs to be.
- While ‘in the park’ means more than the person is enclosed within the park.
- However, it does not specify where in particular the person is, just around the area of the park.
- When this happens, a bond’s price will either be above its par value (above par) or below its par value (below par).
If a company issues a bond with a 5% coupon, but prevailing yields for similar bonds are 10%, investors will pay less than par for the bond to compensate for the difference in rates. The bond’s value at its maturity plus its yield up to that time must be at least 10% to attract a buyer. Bonds commonly sell on the open market at prices that may be higher or lower than the par value. These variations are caused by differences between the market interest rate and the stated interest rate of a bond, as well as changes in the credit rating of the bond.
The reverse holds true if an investor buys a bond at a price below its par value – that is, the effective interest rate to the investor will be more than the stated interest rate on the bond. The coupon rate of a bond is the stated amount of interest that the bond will pay an investor at the time of its issue. A bond’s yield is its effective rate of return when the bond’s price changes. A bond’s yield is calculated as coupon rate / current bond price. They can be issued at a premium (price is higher than the par value) or at a discount (price is below the par value).
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If prevailing yields are lower, say 3%, an investor is willing to pay more than par for that 5% bond. The investor will receive the coupon but have to pay more for it due to the lower prevailing yields. Par value is static, unlike market value, which fluctuates with credit ratings, time to maturity, and interest rate fluctuations. The par value is assigned at the time the security is issued. When securities were issued in paper form, the par value was printed on the face of the security, hence the term “face value.” Here, ‘at the park’ signifies the person’s location at the moment is the park, but it doesn’t specify where exactly around the park’s area the person is.
Below are examples of using ‘at the park’ in a sentence below. Below are more examples of using ‘in the park’ in a sentence. If a person who is not at the park asks where you are, replying with either ‘I’m at the park right now’ or ‘I’m in the park right now’ works since the person needs not to ask for your specific location. However, if a person who is also in the park asks where you are, replying with ‘I’m in the park right now’ is more favorable as it specifies where specifically you are.
Par value is the stock price stated in a corporation’s charter. The intent behind the par value concept was that prospective investors could be assured that an issuing company would not issue shares at a price below the par value. If, when a company issues a new bond, it receives the face value of the security, the bond is said to have been issued at par. If the issuer receives less than the face value for the security, it is issued at a discount. If the issuer receives more than the face value for the security, it is issued at a premium.
It makes ‘at the park’ more general as the person can be anywhere by that ‘x’ per se. However, it does not specify where in particular the person is, just around the area of the park. The preposition ‘in’ specifies that the person is in the park itself and not anywhere else near the park.