There may be several reasons for the difference between the market price and the face
value of particular bonds: see Table 3.
That's also a play on words, since duration, as it applies to fixed income securities, is a great measure of the potential price
volatility of a particular bond or debenture, or even of a portfolio of bonds and debentures.
Diamond had always been assumed to be a special case
because of its particular bonding pattern, which is much more rigid than the way atoms of a metal are held together, Jeanloz explains.
It can have severe effects on the price and
prospects of a particular bond if it is downgraded from «BBB,» which is investment grade, to «BB» which is below investment grade.
Many factors affect the value, or price,
of a particular bond, but the two big influences are 1) future inflation expectations (as reflected in general interest rates) and 2) the risk of Corp A «defaulting» — not meeting its obligation to make each year the $ 50 interest payment and, eventually, repaying the $ 1,000 bond principal.