will require an interest rate. For example, if the interest rate is 25%, then a payment of $125 a year from now

will have a present discounted value of $100—that is, you could take $100 in the present and have $125 in the

future. (We discuss this further in the appendix on Present Discounted Value.)

In financial terms, a bond has several parts. A bond is basically an “I owe you” note that an investor receives in

exchange for capital (money). The bond has a face value. This is the amount the borrower agrees to pay the

investor at maturity. The bond has a coupon rate or interest rate, which is usually semi-annual, but can be

paid at different times throughout the year. (Bonds used to be paper documents with coupons that investors

clipped and turned in to the bank to receive interest.) The bond has a maturity date when the borrower will

pay back its face value as well as its last interest payment. Combining the bond’s face value, interest rate, and
{"upload_timestamp": "2026-02-07T15:24:38.309401", "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_size_mb": 26.99, "file_type": ".pdf", "batch_upload": true, "moddate": "2022-12-07T14:23:05-06:00", "file_name": "Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "creator": "PDFMiner", "title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597}