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4 Terms
What does Coupon Rate mean? (Nominal yeild)
The annual kickback from a bond (money given to bond buyer) for purchasing. It is the intrest the buyer recieves. Its a percentage that is multiplied by the facevalue to find what the buyer recieves.
Market Rate
What identical bonds have for their coupon rate. If the bond you're buying has a coupon rate that is higher than you are getting a discount and if it is lower than your bond is actually worth less money than it is priced at.
What is Face Value
Its the amount of money that the bond issuer will pay back to the buyer for buying the bond plus intrest made. (SO if the bond was 1,000 dollars and at 6% coupon. The buyer would get paid its 6% every period and then its 1000 at the end)
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