I'm just learning about bonds, reading an introductory book about investing in German. Please correct me if terms are wrong, and if this question can be improved.
Consider a bond:
Lifetime: 3 years
Nominal value: 100 USD
Yearly interest rate: 5%
If I buy that bond, then I assume after three years, I get my money back from the issuer, and in the meantime, I've earned:
3 × 5% × 100 USD = 15 USD
I understand that if I want to sell the bond before the end of its lifetime, then I may get less than 100 USD, for example if it is now competing with a comparable bond with 8% interest rate. Also, I can imagine selling the bond for up to its nominal value plus outstanding interest. In the first year that would be: 115 USD In this case, the buyer would not make any profit.
Are there circumstances where the market price of a bond rises beyond its lifetime value, i.e. beyond its nominal value plus interest?