As with any security or capital investment, the theoretical fair value of a bond is the present value of the stream of cash flows it is expected to generate. Hence, the value of a bond is obtained by discounting the bond's expected cash flows to the present using an appropriate discount rate.
Fair Bond Value means the price calculated by an Independent Financial Adviser as being the average of the prices of the Bonds on each dealing day during the Fair Bond Value Calculation Period.
A bond's dollar price represents a percentage of the bond's principal balance, otherwise known as par value. A bond is simply a loan, after all, and the principal balance, or par value, is the loan amount . 1 So, if a bond is quoted at $98.90 and you were to buy a $100,000 two-year Treasury bond, you would pay ~$98,900.
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