Bond coupon rate vs yield
[DOC File]Chapter 16
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Prices, Coupon Rates and Yield to Maturity. Interest rate that makes the present value of the bond’s payments equal to its price. Solve the bond formula for r. Yield to Maturity Example : 8% annual coupon, 30YR, P0 = $1276.76. YTM = Bond Equivalent Yield = 6% (3%*2) Effective Annual Yield: (1.03)2 - 1 = 6.09%
[DOC File]UNIT 6: VALUATION OF BONDS, PREFERENCE AND …
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When the required yield on a bond falls below its coupon rate, the bond sells at a premium. Current yield: The current yield relates the annual coupon interest to the market price. It is expressed as. Current yield = Annual Interest. Price. Ex. A Birr 1000 Bond issued at 12% at par for a period of ten years. Now the market price of the bond is ...
[DOC File]Bonds, Instructor's Manual
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When the going rate of interest is above the coupon rate, a fixed-rate bond will sell at a "discount" below its par value. If current interest rates are below the coupon rate, a fixed-rate bond will sell at a "premium" above its par value. g. The current yield on a bond is the annual coupon payment divided by the current market price.
[DOC File]Chapters 10&11 - Debt Securities
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Coupon rate and interest payment. Zero-coupon bond: coupon rate is zero, no coupon payment, sells at a discount. For example: a 10 year zero-coupon bond sells at $550 and yields 6.16% per year Maturity date. Call provision: the issuer can repurchase bonds during the call period. Call premium and call price
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