The market value of a bond only counts if it is not held but rather exchanged on the secondary market. The bond’s market value varies in the secondary market before its maturity date as bond dealers look for better-paying issues. When the bond reaches its maturity date, however, its market value equals its par value.
The buying and selling activity of investors in the open market determines the market value of both bonds and stocks.
Bond as we know is a legal document for debt security that puts limitations on the issuer and states the bondholder’s rights. Bond valuation is one such important factor investors consider while determining to invest in a particular company or not. The fair value of a particular bond is usually determined by this technique. The value of a bond is measured by its sale price. But the price of the bond can be estimated before issuance of it by calculating the present value.
For calculating the bond value, one must calculate the present value of the bond’s future interest payments which is termed as cash flow as well as the face value which is the bond’s value upon maturity.