Coupon rate, Return Rate and expiration Rate

Source: Internet
Author: User

Just getting started with bonds (bond) may often confuse the concepts of face-to-face interest rates, yields, and maturity yields. In fact, it is easy to differentiate the concepts as long as they are clearly understood.

The coupon rate is also called the coupon rate. Generally, a bond pays the coupon interest to the holder every six months or one year, while the coupon interest = face value * coupon rate, if the coupon rate of a bond with a nominal value of 1 MB is 5%, coupon frequency = semiannual, the holder will get 25000 coupon interest every six months.

The rate of return, also known as yield rate, refers to the annualized ratio of the actual income and expenditure after the bond is bought. Taking discount bonds as an example, the initial issuance price is 90 PPH, and you have the honor to buy it. After half a year (180 days), the bond price may reach 95, yield Rate = (95-90)/90*360/180 * 100% = 11.11% Note: ACT/360 is used for simplified computing.

The rate of return on expiration, also known as yield to maturity, refers to the annualized ratio of interest and capital gains and losses to costs received by the holder of the bond upon expiration. For example, if the bond lasts for one year, then mty = (100-90)/90 = 11.11%

Contact Us

The content source of this page is from Internet, which doesn't represent Alibaba Cloud's opinion; products and services mentioned on that page don't have any relationship with Alibaba Cloud. If the content of the page makes you feel confusing, please write us an email, we will handle the problem within 5 days after receiving your email.

If you find any instances of plagiarism from the community, please send an email to: and provide relevant evidence. A staff member will contact you within 5 working days.

A Free Trial That Lets You Build Big!

Start building with 50+ products and up to 12 months usage for Elastic Compute Service

  • Sales Support

    1 on 1 presale consultation

  • After-Sales Support

    24/7 Technical Support 6 Free Tickets per Quarter Faster Response

  • Alibaba Cloud offers highly flexible support services tailored to meet your exact needs.