The further a bond is from maturity, the greater will be the difference between the purchase price and the redemption value at maturity.
Bonds sell for a premium in a declining interest rate environment and sell at a discount in a rising interest rate environment.
So, when interest rates rise, the longer a bond's maturity, the more a bond seller will discount its price.The redemption value at maturity is less for the premium bond and is more for the discount bond.Electronic, series EE savings bonds, purchased via TreasuryDirect, are sold at face value.Electronic bond: Month and year are in your.More on Rates and Terms, the rates and terms for an EE bond depend largely on when the bond was issued: Current Value.To use the Calculator, you need the month and year the bond was issued.Now what happens if this 5 bond matured in twenty years?Let's look at an example.The 5 coupon payment (5.4 of the.56 selling price) plus the additional.44 received at maturity (100 par value -.56.44) produces a 6 yield-to-maturity.Next: Duration, Interest, and Maturity.To find the current value of a savings bond, use the.The shorter the bond's maturity, the smaller the discount.If a bond with a 5 coupon and a ten-year sex on the first date or not maturity is sold on the secondary market today while newly issued ten-year bonds have a 6 coupon, then the 5 bond will sell for.56 (par value 100).TreasuryDirect account, paper bond: Month and year are on the bond.Changing interest rates affect bonds with varying maturities differently.This also means that when interest rates fall and bonds are sold at a premium, bonds with shorter maturities will have smaller premiums than bonds with longer maturities.It would sell at a discounted price.44 to produce a 6 yield-to-maturity.(The Calculator also offers past values.). For example, you pay 25 for a 25 bond.
Paper, eE bonds, last sold in 2011, were sold at half of face value.
Bond prices change with changing interest rates, so the effective yield of a previously issued bond will be more in line with that of current issues.
The difference between the purchase price and the redemption price is a component of the bond's yield.