How to Calculate the Coupon Rate of a Bond
It considers not only the coupon payments but also the difference between the bond’s purchase price and its face value. If a bond is purchased at a discount (below face value), the YTM will be higher than the coupon rate. Conversely, if a bond is purchased at a premium (above face value), the YTM will be lower than the coupon rate. Calculating how to calculate coupon rate remains essential for understanding the base interest, but…