Coupon rate

(redirected from Nominal Yields)

Coupon rate

In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year.

Coupon Rate

The interest rate that a bond pays to a bondholder, usually semi-annually. The coupon rate is stated on the bond. This is also called the nominal yield or the yield rate.

Coupon rate.

The coupon rate is the interest rate that the issuer of a bond or other debt security promises to pay during the term of a loan. For example, a bond that is paying 6% annual interest has a coupon rate of 6%.

The term is derived from the practice, now discontinued, of issuing bonds with detachable coupons.

To collect a scheduled interest payment, you presented a coupon to the issuer or the issuer's agent. Today, coupon bonds are no longer issued. Most bonds are registered, and interest is paid by check or, increasingly, by electronic transfer.

References in periodicals archive ?
Even if cash flow considerations favor unindexed debt, rough estimates of the tax effects on the difference between real and nominal yields are calculable for the average investor, and hence approximate adjustments can be made.
Treasuries (Treasuries) as break-even spreads (the difference between 10-year nominal yields and 10-year U.
Short-term bond yields were also strong, but long-term nominal yields fell due to lower inflationary expectations.
Third, term structure models assume stationarity for nominal yields.
But for now the spike in nominal yields has created an unfavourable environment.
In bond markets, nominal yields have started to rise in the developed world but could go much further - real yields still average just 0.
Even nontraditional investors, such as foreigners who can't benefit from the tax-exempt status of most munis, are attracted to the muni market because of relatively high nominal yields compared to those of overseas, said Thomas Casey, senior portfolio manager, Tax-Sensitive Strategies at Standish Mellon Asset Management.
Additionally, as Haubrich, Pennacchi and Ritchken (2012) claim, real yields on ILBs can be derived as the difference between equivalent maturity nominal yields and inflation swap rates, and these synthetic real yields are less prone to uncertain changes in liquidity than TIPS yields.
Indeed, about $6 trillion worth of government bonds around the world today have negative nominal yields.
Meanwhile, the ECB is expected to introduce additional unconventional measures to drive rates in the opposite direction, even if that means putting further downward pressure on some government bonds that are already trading at negative nominal yields.
We focus on forecasts of the quarterly average level of 7 different interest rates: the federal funds rate and the nominal yields of Treasury securities at 6 different maturities between 3 months and 10 years.
Adrian Hartshorn, Senior Partner in Mercer s Financial Strategy Group said, Although the improvement in nominal yields is welcome, any decision to lock into historically low yields by hedging at current levels requires careful consideration, and should be balanced against other hedging opportunities.