In other words, it is the stated rate of interest paid on fixed income securities, primarily applicable to bonds. The formula for coupon rate is computed by dividing the sum of the coupon payments paid annually by the par value of the bond and then expressed in terms of percentage. Conversely, the equation of the coupon rate of a bond can be seen as the percentage of the face value or par value of the bond paid every year. Step 1: Firstly, figure out the face value or par value of the issued bond.
It will be easily available in the funding proposal or the accounts department of the company. Step 2: Next, determine the no. Then all the periodic payments are added up to calculate the total coupon payment during the year.
In case of equal periodic payments, the total annual coupon payment can be computed by multiplying the periodic payments and the no. Let us take an example of bond security with half-yearly coupon payments. Do the Calculation of the coupon rate of the bond.
Let us take another example of bond security with unequal periodic coupon payments. In rare instances, a publisher has elected to have a "zero" moving wall, so their current issues are available in JSTOR shortly after publication.
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Were these topics helpful? He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own.
Guide to Coupon Rate formula. Here we will learn how to calculate Coupon Rate with examples, Calculator and downloadable excel template. Find out how to use Microsoft Excel to calculate the coupon rate of a bond using its par value and the amount and frequency of its coupon.
He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University. Last modified July 16th, by Michael Brown. You May Also Like. Discount Rate.