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# Coupon Rates, Coupon Yields and Maturity

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A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculated the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates, which of the three values would be highest and which would be lowest? Explain.

#### Solution Preview

The nominal yield is the same as the coupon rate. This is based only on the bond's par value and is not related to the market value of the bond. The nominal yield is how much an investor will receive each year from the issuer. These payments are made semi-annually.

The current yield is the return on investment relating the coupon rate to the dollar amount used to ...

#### Solution Summary

The coupon rates, coupon yields and maturity are determined.

\$2.49