CFA Level I · CFA Level I Exam · Fixed-Income Instrument Features
A bond's indenture states that the issuer will repay the principal in a single payment on the stated final date. The amount repaid at that date is most accurately described as the bond's:
The amount repaid at maturity is the bond's par value, also called face value or principal. The coupon is the periodic interest, and yield to maturity is a return measure, so neither describes the single principal repayment stated in the indenture.
- Acoupon
- Bpar valueCorrect
- Cyield to maturity
Explanation
The par value (face value, principal) is the amount the issuer promises to repay at maturity. The coupon is the periodic interest payment, and yield to maturity is the investor's annualized return if the bond is held to maturity, not a repayment amount.
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