Bond Yield Rate vs. Coupon Rate: What's the Difference?

A bond's coupon rateis the rate of interest it pays annually, while its yield is the rate of return it generates. A bond's coupon rate is expressed as a percentage of its par value. The par value is simply the face value of the bond or the value of the bond as stated by the issuing entity. Thus, a $1,000 bond with a coupon … See more

CouponFollow Extension

$1000
OFF

Bond Yield Rate Vs. Coupon Rate: What's The Difference?

3 weeks from now

investopedia.com

FAQs about Bond Yield Rate vs. Coupon Rate: What's the Difference? Coupon?

What is the difference between coupon and yield?

Coupon and yield are both important concepts in the world of finance and investing. A coupon refers to the fixed interest payment that a bondholder receives periodically, usually annually or semi-annually, based on the bond's face value. It is expressed as a percentage of the face value and remains constant throughout the bond's life. ...

What are coupon rates & yield?

Coupon rates and yield are very important components of a bond for an investor in a bond. The coupon rate is paid either quarterly, semi-annually, or yearly depending on the bond. On the basis of the coupon payment and face value of the bond, the coupon rate is calculated. ...

What is bond yield rate vs coupon rate?

Bond Yield Rate vs. Coupon Rate: An Overview A bond’s coupon rate is the rate of interest it pays annually, while its yield is the rate of return it generates. A bond’s coupon rate is expressed as a percentage of its par value. The par value is simply the face value of the bond or the value of the bond as stated by the issuing entity. ...

What is yield to maturity vs coupon rate?

Yield to Maturity vs. Coupon Rate: An Overview A bond's yield to maturity (YTM) is the percentage rate of return for a bond, assuming that the investor holds the asset until its maturity date and receives all its remaining coupon payments and return of the principal (par value) at maturity. A bond's... ...

What is yield to maturity (YTM) & coupon rate?

The yield to maturity (YTM) is the estimated annual rate of return for a bond assuming that the investor holds the asset until its maturity date. The coupon rate is the earnings an investor can expect to receive from holding a particular bond. To complicate things the coupon rate is also known as the yield from the fixed-income product. ...

What happens if yield-to-maturity is less than coupon rate?

Explanation: If the yield-to-maturity of a bond is less than the coupon rate offered on the bonds issued by a company, then the bonds will be sold at a premium. Selling bonds at a premium means that selling them at a price above the par value. ...