Above Par Stocks

Above Par - A bond that is purchased at an above par price can have two results when it reaches maturity. Either it will have a greater face value or a lesser face value, depending on whether stock market interest rates have risen or fallen after the bond was purchased. If the stock market rates have raised the coupon paid, value of the bond, will exceed the discount rate, cost to purchase; therefore, you will have made a tidy profit. However, if the stock market interest rates have fallen, you will take a capital loss since the bond can only be cashed out at face value. Guess if you own bonds, the only safe way to go is UP!