The coupon is the stated interest rate of the bond, and is also mentioned in the bond's agreement, or indenture. Bond investors generally choose bonds in order to establish regular streams of income earned from bond interest. The interest rate of the bond as stated in the bond indenture. If the coupon rate is high relative to market interest rates for similar bonds, buyers will bid up the price of the bond. Current yield A bond's coupon rate divided by its current price.
Current yield is a snapshot measure of the bond's value relative to other bonds.
Current yield is limited in its usefulness since it does not consider reinvestment of coupon interest or when interest income is received. Discount A price less than the par value of the bond. For instance, a bond that sells for 98.50 sells at a 1.5 percent discount to the bond's par value. Face value See par value . Imputed interest For investors in zero-coupon bonds , imputed interest is the difference in the bond's market value as it rises to par value from its discounted value.