A bond is a debt security that pays a fixed amount of interest until maturity. When a bond matures, the principal amount of the bond is returned to the bondholder. Many investors calculate the present value of a bond. The present value is one of several factors an investor may consider before buying the investment. A bond’s present value is based on two calculations. The investor computes the present value of the interest payments and the present value of the principal amount received at maturity.
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