Coupon Rate Calculation

Written by:Abraham A.
Location:Bonds

Finance.ThinkAndDone.com provides you online tool to calculate coupon rate of a bond when you provide the bond's maturity value, market price, yield on bond, years till maturity. The online tool shows step by step workout for coupon rate calculation using the coupon rate formula. The coupons may be either paid on annual basis or semi-annual basis.

Location: Bonds

Coupon Rate Calculation

Developed by:Emma A.
Location:Financial Calculators
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Results

Compounding = semi annually
Par Value = 1000
Market Rate = 8
Market Price = 1100
N = 20

Coupon Rate Formula
Coupon Rate = 2[ (Market Price - Par Value x PVIF(ytm%, n) ) / ( Par Value x PVIFA(ytm%, n) ) ]
PVIFA(0.04, 20) = 13.590326345
PVIF(0.04, 20) = 0.456386946201

Coupon Rate Calculation
Coupon Rate = 2[ (1100 - 1000 x 0.456386946201 ) / ( 1000 x 13.590326345 ) ]
Coupon Rate = 2[ 1100 - 456.386946201 ] / 13590.326345
Coupon Rate = 2[643.613053799 / 13590.326345]
Coupon Rate = 2[0.0473581750329]
Coupon Rate = 9.47%

Input Data

Please enter the maturity value of the bond (debt) 
Please enter the market price of the bond (debt) 
Please enter the market rate of return (YTM) of the bond (debt) 
Please enter the years to maturity  


Instructions

You have to provide certain details about the bond for which you have find coupon rate. Assuming we have a $1,000 par value with market price of $1,100 bond with 10 years to maturity with similar bonds on market having yield of 8%.

  1. You have to key in 1000 as par value of the bond
  2. You have to key in 1100 as the market price
  3. You have to key in 8 as the yield on bond
  4. You have to key in 10 as years to maturity
Location: Financial Calculators