# Discount bond coupon rate

##### *2019-08-25 20:07*

New Investor's Guide to Premium and Discount Bonds. New Investor's Guide to Premium and Discount Bonds. A bond trades at a discount when its coupon rateCoupon tells you what the bond paid when it was issued, but the yield to maturity tells you how much it will pay in the future, and that's important. discount bond coupon rate

The discount in a discount bond doesn't necessarily mean that investors get a better yield than the market is offering, just a price below par. For example, if a corporate bond is trading at 980, it is considered a discount bond since its

To calculate the bond's coupon rate, divide the total annual interest payments by the face value. In this case, the total annual interest payment equals 10 x 2 20. The The discount rate is used to create a present value factor, which is applied to the payment of streams. For example, if a 100 bond is a zerocoupon, oneyear bond paying 10 percent interest, the only payment made is the repayment of the 100 principal plus 10 in interest. This occurs at the end of year 1.**discount bond coupon rate** A bond will trade at a discount when it offers a coupon rate that is lower than prevailing interest rates. Since investors always want a higher yield, they will pay less for a bond with a coupon rate lower than the prevailing rates.

A discount rate often refers to the rate of discount, d, of a zerocoupon bond which is the ratio of the price of the zerocoupon bond and its nominal amount. A 90. 000 zerocoupon bond, for example, has a discount rate of 10 but yield of 11. 11. *discount bond coupon rate* How can the answer be improved? When a bond is issued, it pays a fixed rate of interest called a coupon rate until it matures. This rate is related to the current prevailing interest rates and the perceived risk of the issuer. When you sell the bond on the secondary market before it matures, the value of the bond, not the coupon