A coupon bond is a debt instrument that offers a fixed interest income to the lender. The coupon is the rate of interest that the borrower has to pay to the lender and it is calculated by multiplying the coupon rate with the face value.
Most of the corporate bonds offer coupon rate. For example, a 5 years bond with a coupon rate of 6% is traded for $975.00. This means that the bond has a face value of $1000 and it offers 6% of the face value i.e. $60 every year for five years. The $60 is the coupon payment.
Coupon rate is different from the yield to maturity rate. If the coupon rate is higher than the yield to maturity rate the bond will be selling at a price above face value. In case the coupon rate is lower than the YTM, the bond will be selling at a discount to the face value.
The following table shows the prices of a sample of U.
Frostbite Thermalwear has a zero coupon bond issue outstanding with a face
Boeing Corporation has just issued a callable (at par) three
Suppose you bought a 6 percent coupon bond one year ago for
Last year Clark Company issued a 10-year, 12%
A 10-year, 12% semiannual coupon bond with a
After Dan’s EFN analysis for East Coast Yachts (see the Mini
For the firm in the previous problem, suppose the book value
The YTM on a bond is the interest rate you earn on
For each of the following pairs of Treasury securities (each with
