Final answer:
A bond or promissory note includes the face value, interest rate, and maturity date as key elements. These factors allow investors to calculate the present value of the bond, which fluctuates with market interest rates to reflect the bond's yield.
Step-by-step explanation:
In financial terms, a promissory note is an instrument similar to a bond, representing a debt the issuer owes to the holder. This debt includes several key components: the face value, which is the amount the borrower agrees to pay back at maturity; an interest rate, which dictates the coupon payments; the maturity date, which is when the borrower has to repay the face value along with any final interest payments.
Depending on varying market interest rates and the bonds' features, the present value can be calculated, which represents the maximum amount an investor is willing to pay for the bond at a given time. If the market interest rate is different from the bond's coupon rate, the value of the bond will fluctuate accordingly to equalize the yield with current market conditions. Therefore, understanding these elements is crucial for determining the attractiveness of a bond as an investment.