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A fixed coupon rate of 3% means annual interest of EUR 30 on a bond with EUR 1,000 face value. It does not mean you earn a 3% return on whatever price you pay. At a purchase price of EUR 900, those same annual interest payments give a current yield of about 3.33%.
Coupon rate, current yield and yield to maturity answer different questions. The examples below separate the amount promised, the price used in the calculation and the payment dates. All prices and payments are fictional euro amounts, not current market quotes or currency conversions.
The coupon rate applies to face value
The face value, also called par value, is the amount used to calculate this bond’s fixed coupon. With EUR 1,000 face value and a 3% annual coupon:
Annual coupon payment = EUR 1,000 × 0.03 = EUR 30.
That payment stays EUR 30 when this bond’s market price changes. Buying the same face value more cheaply does not change its fixed coupon rate. The German Finance Agency’s description of conventional nominal-interest securities gives an issuer-specific example of fixed annual interest and contractual repayment at par.
This is a fixed-coupon example. Floating-rate interest, inflation-linked payments and unusual redemption terms need their own contractual treatment. A promise to repay is also different from a guarantee that the issuer will pay.
A price of 90 means 90% of par, not EUR 90
A bond can be quoted as a percentage of face value. For EUR 1,000 face value, a price of 90% corresponds to a quoted value of EUR 900; 110% corresponds to EUR 1,100.
Quoted value = face value × quoted percentage ÷ 100.
For now, exclude accrued interest, transaction charges and taxes. The quoted value under those assumptions is the denominator used in our current-yield examples. It is not automatically the full amount you would pay to settle an actual purchase.
The same cash coupon at three prices
Current yield compares the annual cash coupon with the price being considered. Using EUR 900:
Current yield = EUR 30 ÷ EUR 900 × 100 = 3.333…%, or about 3.33%.
| Price as % of par | Quoted value | Annual cash coupon | Current yield |
|---|---|---|---|
| 90% | EUR 900 | EUR 30 | 30 ÷ 900 × 100 ≈ 3.33% |
| 100% | EUR 1,000 | EUR 30 | 30 ÷ 1,000 × 100 = 3.00% |
| 110% | EUR 1,100 | EUR 30 | 30 ÷ 1,100 × 100 ≈ 2.73% |
Current yield does not include a later price gain or loss, the redemption amount or the time until redemption. SIX’s bond explanation distinguishes this snapshot from yield to maturity. The 3.33% figure is therefore an income-to-price ratio, not a promise that your wealth will grow by 3.33% over the next year.
Yield to maturity uses dated promised payments
Yield to maturity, or YTM, considers the promised coupons and principal repayment at their respective dates. Mathematically, it is the discount rate that makes the present value of those payments equal the bond’s price. FINRA explains this cash-flow definition and its payment assumptions.
For a complete one-year example, suppose you buy immediately after a coupon date, with no accrued interest. You pay EUR 900. Exactly one year later, the final EUR 30 coupon and EUR 1,000 principal repayment are due together. Assume every promised payment arrives on time, with no default, early redemption, charges or taxes. There are no interim coupons to reinvest.
| Time | Payment | Cash flow to the buyer |
|---|---|---|
| Now, immediately after a coupon date | Purchase price | −EUR 900 |
| Exactly one year later | Final coupon EUR 30 + principal EUR 1,000 | +EUR 1,030 |
The gain is EUR 130: EUR 30 interest plus the EUR 100 difference between purchase price and repayment. The one-year rate is:
(EUR 1,030 ÷ EUR 900 − 1) × 100 = 14.444…%, or about 14.44%.
For this single payment exactly one year away, the discount equation is 900 = 1,030 ÷ (1 + y), giving y = 13/90 as a proportion. It is the YTM for this precisely stated example. Current yield remains about 3.33%, because that calculation includes only EUR 30 divided by EUR 900.
You cannot determine a unique YTM from a price of EUR 900 and a 3% coupon without the remaining payment dates. With several years left, coupons and repayment occur at different times. Adding the entire repayment gain to one year’s coupon would not produce the correct annual yield.
Quoted price and total outlay differ
When a bond is bought between coupon dates, the settlement amount may include accrued interest for the seller’s part of the interest period. The next coupon received by the buyer is then not all a new gain: part was economically paid for at purchase.
A simplified distinction is:
Total outlay = quoted value excluding accrued interest + accrued interest + purchase charges.
A clean price excludes accrued interest; a dirty price includes it. Separately charged fees can still need to be added. Deutsche Börse’s own price explanation identifies its displayed bond prices as clean prices, while its bond-trading brochure explains that the bond’s terms determine the accrued-interest method.
The one-year example deliberately has no accrued interest. For a different purchase date, check the actual settlement amount, payment schedule and calculation convention rather than reusing EUR 900 as the full outlay.
A calculated yield does not guarantee your return
YTM values promised payments. An issuer can fail to make interest or principal payments, and invested capital can be lost. Selling before maturity introduces an actual sale price, which can differ from the price you expected. Contractual call rights can also change when the bond is repaid. BaFin’s bond guide describes credit, price and liquidity risks and possible early-redemption terms.
With multiple coupons, your eventual wealth also depends on whether you reinvest the payments and the rates actually available. A calculated YTM does not promise those future reinvestment rates. Fees, bid–ask spreads and taxes need their own treatment, and euro-denominated payments do not establish a return in another currency.
Inflation adjustment is a further question. The nominal and real return guide explains growth relative to a declared price index. Broader questions about why markets react to news and investing, trading and speculation concern information, purpose and product rights; none replaces the bond’s payment terms.
Common questions
Does a falling price change the fixed coupon?
No. In this example, the coupon stays 3% of EUR 1,000, or EUR 30 annually. A lower price raises the ratio of that payment to the price. It does not by itself establish your total return or a safe investment.
Why can 3%, 3.33% and 14.44% describe the same bond?
They use different inputs. The 3% coupon uses face value; current yield of about 3.33% uses EUR 30 divided by EUR 900. The 14.44% includes EUR 1,000 principal plus EUR 30 received exactly one year after paying EUR 900, under the stated no-cost, no-accrual and full-payment assumptions.
Can I calculate YTM without the remaining term?
Not from the coupon and price alone. You need the amounts and dates of the promised payments and the relevant calculation convention. The one-year formula is valid for its specified single final payment, not a shortcut for every multi-year bond.
Does a EUR 900 quote mean I pay EUR 900 in total?
Not necessarily. If it is a clean quoted value, accrued interest and purchase charges may be added. The example excludes them explicitly; an actual settlement statement and the bond’s terms determine what applies.
Is YTM my guaranteed after-tax profit?
No. It is a measure of a promised payment schedule, not a guarantee of payment, reinvestment rates or your personal net outcome. Default, early redemption, an early sale, costs, taxes and currency changes can affect the result. The number also does not establish inflation-adjusted purchasing power.
Explore HypaForecast markets
Browse the market list or the 5-minute and 15-minute BTC pages. These are general navigation links, separate from the fictional bond example; they do not establish a bond market offering or your eligibility to trade.
Sources and scope
The explanation uses the cited issuer, exchange and investor-education passages on fixed coupons, quoted prices, accrued interest and discounted promised payments. Source passages were checked on 20 October 2026; the entire underlying PDFs and their figures were not inspected. Issuer and venue descriptions retain their stated scope. The euro amounts, prices and one-year payment schedule are fictional. The 14.44% result applies only to its exact timing and exclusions, not to an unspecified multi-year bond, a current yield quote or a personal net return.
- German Finance Agency: Overview of German Government securities
- SIX: Bond basics and current yield versus yield to maturity
- FINRA: Understanding Bond Yield and Return
- Deutsche Börse: Bond prices with and without accrued interest
- Deutsche Börse: So handeln Sie Anleihen
- BaFin: Bonds—payment, price, liquidity and contractual risks
HypaForecast publishes educational guides and operates a prediction market. This guide explains bond measurements and their limits; it does not recommend a bond, promise income or establish your eligibility to use a service.
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