Par curve
The coupon rate at which a bond of each maturity would price at face value. One of three presentations of a single term structure.
Where you will meet it
Par curve appears in 3 learning outcomes on the CFA syllabus. A few of them:
- Tell apart the spot curve, the par curve and the forward curve
“The par curve gives, for each maturity, the coupon rate at which a bond would price at par, and it is derived from the spot curve.”
- Explain how bootstrapping extracts zero-coupon (spot) rates from the par curve
“Bootstrapping works along the par curve one maturity at a time.”
- Work out the arbitrage-free value of a straight fixed-coupon bond
“Spot rates can come directly from strip prices or be bootstrapped from the par curve.”
See also
Practise it
Practise par curve until it is automatic: questions that explain every wrong option.
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