Final answer:
Whether a bond is issued at par, premium, or discount, when it matures, the borrower pays the bondholder the face value of the bond. The bond's coupon rate and market interest rates affect its trading price but not the repayment amount at maturity. The face value is the key figure that represents the amount originally lent and promised to be returned at maturity.
Step-by-step explanation:
When a bond matures, regardless of whether it was issued at par, premium, or discount, the amount paid to the bondholder equals the face value of the bond. This face value is the amount the borrower agrees to pay back to the investor at the bond's maturity date. Throughout its life, a bond may be traded above or below its face value, which is influenced by various factors including the market interest rate and the bond's coupon rate or interest rate. However, when the maturity date arrives, the borrower is obligated to pay the investor the initial amount borrowed, which is the face value, along with the last interest payment.
The calculation of a bond's present value is important for investors to determine what they are willing to pay for the bond. The present value is dependent on the bond's various features such as the face value, interest rate, market interest rates, and the bond's maturity date. Nonetheless, the repayment at maturity does not change; it remains the agreed-upon face value.