7.14.2005

Q&A: What are the coupon payments for a $50,000 par value...

...8% coupon rate, monthly-pay, mortgage-backed security?

$50,000 * 8% / 12 = 333.33

  • With monthly coupon payments, the annual coupon rate is divided by 12 to determine the monthly coupon rate.

Bonus Points

  • Although bond coupon rates are usually stated in annual rates, the actual coupon is divided into two semi-annual payments.
  • The par value for most corporate bonds is $1,000, higher denominations for government issues.
    • The bond's final cashflow includes the return of par value.
  • Bonds which are unsecured obligations of the company are called debentures.

Category: C++ Quant > Debt

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