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Bond features for both types of bonds

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Explain the difference between a bond's coupon interest rate, the yield to maturity, and the current yield.

How can we differentiate between a premium and discount bond?

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The solution provides a detailed discussion with references explaining the difference between a bond's coupon interest rate, the yield to maturity, and the current yield. The difference between a premium and discount bond is also explained.

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The coupon interest rate of a bond is the set amount of interest, in the form of a percentage, that the bond is paying. This remains for the life of the bond and is unique to each bond. The coupon interest rate is set at the time that the bond is issued. This is the rate that is used in calculating the amount the bondholder will receive as interest income from the bond. ...

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