Coupon rate: Difference between revisions
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The nominal annual rate of interest on a security, expressed as a percentage of the principal amount. | The nominal annual rate of interest on a security, expressed as a percentage of the principal amount. | ||
<span style="color:#4B0082">'''''Coupon rate example'''''</span> | |||
The annual interest payable on a bond is 3. | |||
The principal amount is 100. | |||
Coupon rate = annual interest / principal | |||
= 3 / 100 | |||
= '''3%''' | |||
Working in the other direction: | |||
Coupon rate x principal = annual interest | |||
For example: | |||
3% x 100 = 3 | |||
== See also == | == See also == | ||
* [[Capped FRN]] | * [[Capped FRN]] | ||
* [[Coupon]] | |||
* [[Current yield]] | |||
* [[Nominal annual rate]] | |||
* [[Par]] | * [[Par]] | ||
* [[Par bond]] | * [[Par bond]] | ||
* [[Par yield]] | * [[Par yield]] | ||
* [[Principal]] | * [[Principal]] | ||
* [[Yield]] | |||
* [[Yield to maturity]] | |||
[[Category:The_business_context]] | |||
[[Category:Corporate_finance]] | |||
[[Category:Investment]] | |||
[[Category:Long_term_funding]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 21:55, 6 August 2020
The nominal annual rate of interest on a security, expressed as a percentage of the principal amount.
Coupon rate example
The annual interest payable on a bond is 3.
The principal amount is 100.
Coupon rate = annual interest / principal
= 3 / 100
= 3%
Working in the other direction:
Coupon rate x principal = annual interest
For example:
3% x 100 = 3
