In the field of finance, there are many professional terms and concepts for investors and financial professionalsPlaythreecardpokerIt is important to understand these terms and concepts. Among them, the "discount-to-premium ratio" is an important indicator, which can help investors better evaluate the value and yield of bonds.
What is the discount rate?
The discount ratio refers to the difference between the market price of a bond and its face value, usually expressed as a percentage. In other words, the discount ratio is the premium or discount of the bond market price relative to its face value. For example, if a bond with a face value of 1000 yuan has a market price of 950 yuan, the discount rate is-5%; if the market price is 1050 yuan, the discount rate is 5%.
The importance of discount and overflow rate
Discount-to-premium ratio is an important indicator, which can reflect the market demand and supply of bonds. If the discount ratio is positive, it indicates that the market demand for bonds is greater than supply, and investors are willing to pay a price higher than the face value for the purchase of bonds; on the contrary, if the discount ratio is negative, it indicates that the supply of bonds exceeds the demand for bonds. investors are willing to accept prices below face value to buy bonds.
In addition, the discount ratio can also reflect the market's view of the credit status of bond issuers. If the credit status of a bond issuer is poor, the market may have a negative impact on the discount rate of its bonds, resulting in a decline in the discount rate. On the contrary, if the credit condition of the bond issuer is good, the market may have a positive impact on the discount rate of its bonds, resulting in an increase in the discount rate.
How to calculate the discount and overflow rate?
The formula for calculating the discount rate is: (market price-face value) / face value * 100%. For example, if a bond with a face value of 1000 yuan has a market price of 950 yuan, the discount ratio is (950-1000) / 1000 * 100% =-5%.
It should be noted that the maturity of the bond should be taken into account when calculating the discount ratio. If the bond is about to mature, the discount ratio may not have much impact, but if the bond still has a long maturity time, the discount ratio may have a greater impact on investors' returns and risks.
The discount rate is different from itsPlaythreecardpokerThe relationship between his factors
The discount rate does not exist in isolation, it is closely related to other factors such as market interest rate, credit risk, liquidity and so on. Changes in market interest rates will affect the price of bonds, and then affect the discount rate; changes in credit risk will affect investors' demand for bonds, and then affect the discount rate; changes in liquidity will also affect the price of bonds, and then affect the discount rate.
The influence of factors on the discount rate the market interest rate rises, the bond price decreases, the discount premium rate may be negative; when the market interest rate decreases, the bond price rises, the discount premium rate may be positive. Credit risk credit risk increases, bond prices fall, the discount premium may be negative; credit risk decreases, bond prices rise, the discount premium may be positive. If the liquidity is poor, the bond price may fall and the discount premium may be negative; if the liquidity is good, the bond price may rise and the discount premium may be positive.In a word, the discount-premium rate is an important index to evaluate the value and return of bonds. Investors should fully understand and make full use of the discount-premium rate in order to make better investment decisions.
