Treasury Bond Coupon Payment Calculator

Treasury Bond Coupon Payment Formula:

\[ C = \frac{\text{Coupon Rate} \times F}{m} \]

Periodic Coupon Payment (C):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Treasury Bond Coupon Payment?

A treasury bond coupon payment is the periodic interest payment made to bondholders. It represents the return investors receive for lending money to the government through bond purchases.

2. How Does the Calculator Work?

The calculator uses the treasury bond coupon payment formula:

\[ C = \frac{\text{Coupon Rate} \times F}{m} \]

Where:

\( C \) — Periodic coupon payment (currency units)
\( \text{Coupon Rate} \) — Annual coupon rate (decimal)
\( F \) — Face value of the bond (currency units)
\( m \) — Number of payments per year (unitless)

Explanation: The formula calculates the periodic interest payment by dividing the annual coupon payment by the number of payment periods per year.

3. Importance of Coupon Payment Calculation

Details: Accurate coupon payment calculation is essential for investors to understand their expected returns, for portfolio management, and for comparing different bond investment opportunities.

4. Using the Calculator

Tips: Enter the annual coupon rate as a decimal (e.g., 0.05 for 5%), the face value of the bond, and the number of payments per year (typically 2 for semi-annual payments). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between coupon rate and yield?
A: Coupon rate is the fixed interest rate based on face value, while yield reflects the current return based on the bond's market price.

Q2: How often are treasury bond coupon payments made?
A: Most treasury bonds make semi-annual payments (m=2), meaning payments are made every six months.

Q3: What happens if I buy a bond between payment dates?
A: You pay accrued interest to the seller for the period they held the bond since the last coupon payment.

Q4: Are treasury bond coupon payments taxable?
A: Yes, coupon payments are subject to federal income tax, but exempt from state and local taxes.

Q5: Can the coupon rate change over time?
A: For fixed-rate treasury bonds, the coupon rate remains constant. However, treasury inflation-protected securities (TIPS) have adjustable principal values.