How does coupon rate differ from yield to maturity?

Started by Rehema Shabani 1 hour ago

I keep seeing both terms mentioned for the same bond and get confused about which one actually tells me my return.

1 Reply

Juma Ally

1 hour ago

Coupon rate is fixed at issue and does not change. Yield to maturity accounts for the price you actually paid, so they can differ if you buy below or above face value. I used Mwekezaji's Bond Yield calculator to see the difference clearly.