Bond Selling Price

The bond selling price is the sum of the present value of the future principal amount plus the total present value of the future interest amounts, all discounted at the prevailing effective interest rate. The same procedure is used to value a bond at any other date (not necessarily the date of sale of the bond). Depending on the relationship of the bond's stated rate to the effective interest rate (at the time, for bonds of similar risk), the bond may sell at a premium or a discount. See also effective interest rate and premium and discount.