The annual bond interest rate refers to the annual interest rate paid by the bond issuer to the bond buyer when raising funds. The bond interest rate is higher than the bank deposit interest rate, because the bond interest rate is subject to the bank interest rate, and the bond liquidity is less than the bank deposit.
The types of bond interest rates include nominal interest rate, market interest rate and effective interest rate. The nominal interest rate is the ratio of bond interest and bond face value, and the formula is: nominal interest rate=interest ÷ face value; Market interest rate is the ratio of bond interest to bond market value. The formula is: market interest rate=interest ÷ market price. The ratio between the actual interest rate and the market price plus the purchase price minus the nominal price. The formula is: actual interest rate=interest ÷ (market price+(purchase price - nominal price)).
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What is the annual interest rate of bonds for? What does post tax yield to maturity mean?
The coupon rate of bonds is used to calculate the interest earned each year.
If the coupon rate is 8% and the face value of the bond is 100 yuan, the interest can be 8 yuan=100 * 8% every year
The interest of corporate bonds is subject to tax, so the after tax yield to maturity refers to the average annual yield of the after tax interest and the final principal obtained after buying the bonds and holding them until the maturity of the bonds, compared with the purchase price
What is the effective interest rate of bonds
Effective Interest Rate/Real interest rate refers to the real interest rate at which depositors or investors get interest returns after excluding inflation rate. The higher the real interest rate of a country, the better the credit of its currency, and the higher the chance of hot money going there. For example, the real interest rate of the US dollar is rising, and the expectation of the Federal Reserve to raise interest rates is continuing, so the investment flow of international hot money to the United States is more obvious. There are many ways to invest, such as bonds, stocks, real estate, antiques, and foreign exchange