I’ve came across a reading that says the floating rate bond is set to par value at the reset dates…can anyone please explain why this happens ?
The main reason for change in the bond value is because of interest rates , interest rate for Floating Bond is reset at certain frequency so whenever interest rate is reset the Value of floating bond equals par value
A bond sells at par if its coupon equals its YTM.
The assumption is that when the coupon resets, it resets to the bond’s YTM.