In the early 1980s, the coupon rate on 10 year Treasury bonds reached 15 percent.
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Why not use a discount rate that is equal to the coupon rate?
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You should consider the coupon rate paid by your bond, which may be higher than the yields currently quoted for Treasuries.
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The most common types of bonds pay a set percentage of interest over a specified period of time, referred to as the coupon rate.
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All things equal, for typical bonds the longer the maturity the higher the duration (or price volatility from interest rate movements), and the smaller the coupon the higher the interest rate risk.
He said the company was motivated by opportunities that abound in the bond market coupled with the higher coupon rate currently at 9 percent per annum.
This would help Greece avoid a funding squeeze and would come perhaps at the cost of conditions floated last week including a higher coupon rate at rollover and collateral to be held by the debt holder.
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This current coupon rate has not yet been set as the management team to underwrite the issue has not been chosen.
In its budget presented late February, the government had announced that it will issue bonds whose coupon rate will be adjusted to reflect changes in inflation.
Bonds have an underlying rate of return the yield, or the coupon if you will, when you buy it.
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In the negotiations over Greek debt, the Greek newspaper Ethnos reported that bondholders are willing to accept a coupon rate of below 4% on bonds they would receive under a debt-exchange program.
In the spring he paid between 70 cents and 80 cents per dollar of face value for a senior tranche of the WaMu Mortgage Pass-Through 2005-AR2, which carries a coupon rate of Libor plus 31 basis points, or 3.52% in September.
Just like the pain experienced by conservative coupon-clipping bond investors, money is barely earning any interest, due to a low rate environment.
If you are going to use a discount rate of 6% AND assume the bonds are selling at par, then you MUST assume that the coupon on the bond is also 6%.
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