How are bond coupons determined at a treasury auction?
I get confused between a coupon and a yield when it comes to bonds. When U.S. treasuries are sold at auction, how is the coupon determined and how is the yield determined?
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Answer by SDD
The current yield is the coupon divided by the price of the bond. So if a 3% bond sells for $ 101, the current yield is 2.97%. The yield to maturity is less than that because it amortizes the 1% premium over the life of the bond (you'll only get $ 100 at maturity even if you paid $ 101).
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Talking about bonded labour
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This form of labour enslaves people and involves bondage to an employer who forces the employee to work to repay an assumed debt. Poverty, caste and a lack of alternative opportunities can trap people in bonded labour.
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