What is a Current Coupon Bond?
The current coupon bond is a type of bond that is equipped with a coupon that is roughly half a percentage point of the current market rates for that type of bond. It is possible to identify several different types of bonds that may be configured as a current coupon bond. Just about any broker dealer can find current coupon bonds that are issued as government, municipal, or corporate bonds. There are two main facts about a current coupon bond to understand. The first consideration to keep in mind is that a current coupon bond possesses an extremely low rate of volatility. This means that the chances of the bond being called early, or some other adverse factor resulting in some sort of trouble for the bond are practically non-existent. Second, the interest rate of these types of bonds will be competitive with other bond offerings on the market today. Since the coupon on the bond will be either a half percentage point above or below the current market rate, the chances of a decent return
” The current coupon bond is a type of bond that is equipped with a coupon that is roughly half a percentage point of the current market rates for that type of bond. It is possible to identify several different types of bonds that may be configured as a current coupon bond. Just about any broker dealer can find current coupon bonds that are issued as government, municipal, or corporate bonds. . There are two main facts about a current coupon bond to understand. The first consideration to keep in mind is that a current coupon bond possesses an extremely low rate of volatility.
