ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The coupon rate is the annual income an investor can expect to receive while holding a particular bond. It is fixed when the bond is issued and is calculated by dividing the sum of the annual coupon payments by the par value.

Detailed explanation-2: -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.

Detailed explanation-3: -Moody’s Seasoned Aaa Corporate Bond Yield is at 4.72%, compared to 4.70% the previous market day and 3.41% last year. This is lower than the long term average of 6.50%.

Detailed explanation-4: -Coupon: This refers to the annual amount of interest a bond pays out and is often expressed as a percentage of the bond’s face value. This means a $1, 000 corporate bond that has a fixed 6% coupon pays $60 a year for the duration of the bond. Most interest payments are made semiannually.