How to calculate the interest rate of a bond?
Let’s take a obligation :
- Nominal = $1000
- Annual coupons = $50
- Current price = 125 points, or $1250
- Maturity = 10 years.
- His rate facial is 50/1000 = 5%
- His rate actuarial is: 50/1250 = 4%
- Yield to maturity = 2.2%
Thus, it is possible to find a large number of securities with a maturity of 2 to 5 or 10 years for example, knowing that the average maturity of a bond is ten years. However, if the investor is interested in the bonds of a specific issuer (a company), he will not always have an exhaustive choice of maturities.
He is currently remunerated on the basis of the increased index 562 (gross index 675) which he has held for more than 6 months and receives a gross monthly index salary of €2,602.22. Taking into account his year of birth, the number of quarters necessary for him to benefit from a full pension is equal to 162 quarters.
Maturity therefore indicates when full repayment will take place. For example, a ten-year bond will earn interest for ten years from when it was purchased on issue. At the end of this period, the “principal” of the bond is repaid to the bearer and the payment of interest ceases.
148 quarters will be taken into account for the calculation of his retirement: 29 full-time years i.e. 116 quarters + (10 years x 0.80 (part-time portion) x 4 (number of quarters in a year) i.e. 32 quarters.