Final answer:
The £1,000 that will be paid at the maturity of Feet's bond is known as the 'face value' or 'principal payment'. this is the amount the issuer agrees to pay back to the bondholder on the maturity date, exclusive of the coupon or interest payments made throughout the life of the bond.
Step-by-step explanation:
The £1,000 mentioned is called the face value or principal payment of the bond. This is the amount that Feet's bond will pay out at maturity, in addition to the annual interest, and is a separate component from the coupon or interest payments received each year.
Bonds can be thought of as loans made by investors to borrowers (like corporations or governments). The borrower promises to pay back the borrowed amount, which is the face value, at a set date in the future known as the maturity date. Until that time, the borrower will also pay the investor periodic interest payments based on the coupon rate of the bond. changing market interest rates influence the attractiveness of a bond. For instance, if the market interest rate rises above the coupon rate of the bond, new investors would expect a discount on the face value if they were to purchase the bond prior to maturity.