2006-12-12 03:37:51 · 5 answers · asked by JOHN M B 1 in Business & Finance ➔ Investing
Coupon rate is the interest rate the t bond is paying. It can be quarterly, halfyearly or annuall payments in which case the effective rates may be higher than the Coupon rates.
2006-12-13 05:00:18 · answer #1 · answered by Mathew C 5 · 0⤊ 0⤋
Burdygirl is correct with respect to coupons. However, T-Bills do not have coupons. They are sold at a discount and redeemed after 13, 26 or 52 weeks at par value. For example, the current discount rate on a 13 week T-Bill is about 5%. This means that you pay about $98,750 for a $100,000 face value T-Bill. In 13 weeks you get back $100,000. Anything longer than 52 weeks is called a treasury note.
You can buy Treasury securities very easily on-line from the following link:
https://www.treasurydirect.gov/
2006-12-12 12:01:39 · answer #2 · answered by Flyboy 6 · 0⤊ 0⤋
The coupon rate is the stated interest rate that the bill pays for example if you have a 4% treasury bill you will get interest of 4% on the face amount. Yield to maturity is what you end up with when the bill matures taking into consideration any premiums or discounts.
2006-12-12 19:58:24 · answer #3 · answered by hockey2525 2 · 0⤊ 0⤋
The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually.
This is also referred to as the "coupon rate" or "coupon percent rate".
Investopedia Says: For example, a $1,000 bond with a coupon of 7% will pay $70 a year.
It is called a "coupon" because some bonds literally have coupons attached to them. Holders receive interest by stripping off the coupons and redeeming them. This is less common today as more records are kept electronically.
2006-12-12 11:53:42 · answer #4 · answered by burdygirl13 2 · 0⤊ 0⤋
t-bills do not pay interest as such. They instead are sold at a discount to face value. The discount that are sold at is what is equivelent to the coupon rate or interest rate they would pay if they were sold at face value. The rate on 6 month bills is currently about 4.8% which means that they pay the equivelent of $480 per year on a $1000 t-bill. But the actual way it works is when the bills are auctioned the bids are received at about $975.40 for a $1000 bill. The person buying the bill pays $975.40 for it put in 6 months receives $1000 which is equivelent to a coupon rate of about 4.8%
2006-12-12 12:01:49 · answer #5 · answered by Anonymous · 0⤊ 1⤋