Understanding Coupon Bond Pricing: A Comprehensive Guide
Calculating the price of a coupon bond involves determining its present value based on factors like its face value, coupon rate, maturity date, and current market interest rates. Coupon bonds, which represent debt obligations with regular interest payments (coupons), play a crucial role in financial markets. They provide investors with a steady stream of income, while offering borrowers a way to raise capital. Historically, the advent of coupon bonds has revolutionized financial transactions and facilitated the flow of investment. This article delves into the intricacies of coupon bond pricing, empowering readers with the knowledge to navigate bond markets effectively.