Face convergence

Par value convergence with a flat yield curve

Par value convergence of a bond above par with a rising yield curve

Par value convergence of a bond below par with a rising yield curve

As a nominal value of convergence is defined as the property of the courses of standard bonds and similar securities , in the direction of the nominal value to move the security.

With a flat interest structure

If the interest structure is flat , the price of a standard bond , which is above par , i.e. H. above their face value, is, progressively downwards. On the due date ( ), the value (= price) of the bond corresponds exactly to its face value. A fixed-rate bond that is below par tends progressively upwards and also meets the nominal value there on the due date. ${\displaystyle T_{n}}$

With a normal interest rate structure

If there is a normal (rising) interest rate structure, the market interest rate for this period also falls as the remaining term decreases . The (fixed) coupons are worth more in relation to the falling market interest rate. For this reason, the price of the fixed-rate bond tends to rise until the effect of par value convergence exceeds the coupon effect and the price of the bond falls against par. This applies equally to bonds above and below par .