For example, TBA mortgage securities often trade with interest rates in increments of 0.5%. Therefore, assuming par value is 100, if Fannie Mae 8% mortgage securities are trading at 99.5 and Fannie Mae 8.5% mortgage securities are trading at 100.75, Fannie Mae's 8% security would be the current coupon.
A principle of mortgage analysis is that the higher a mortgage-backed security's coupon is relative to the current coupon, the more likely that mortgage-backed security is to prepay. Mortgage investors make this relative value analysis in calculating mortgage-backed security yields and valuations.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
current coupon — The term used to refer to all fixed income securities paying interest at the rate currently required by purchasers for securities of that maturity and quality. Current coupon securities trade at or very near par. American Banker Glossary A bond… … Financial and business terms
Current coupon — A bond selling at or close to par, that is, a bond with a coupon close to the yields currently offered on new bonds of a similar maturity and credit risk. The New York Times Financial Glossary * * * The prevailing coupon (interest paid on a… … Financial and business terms
Current Coupon Bond — A bond with a coupon rate that is within 0.5% of the current market rate. Current coupon bonds are typically less volatile than other bonds with lower coupons because the coupon rate is closer to that set by the market. Because a current coupon… … Investment dictionary
current coupon bond — bonds on which the coupon is set approximately equal to the bonds yield to maturity at the time of their issuance. Bloomberg Financial Dictionary … Financial and business terms
Current-coupon issues — Related: Benchmark issues … Financial and business terms
current coupon yield curve — See yield curve. American Banker Glossary … Financial and business terms
Current yield — The current yield, interest yield, income yield, flat yield or running yield is a financial term used in reference to bonds and other fixed interest securities such as gilts. It is the ratio of the annual interest payment and the bond s current… … Wikipedia
current yield — The ratio of the coupon to the current market price of the debt instrument. Chicago Board of Trade glossary (1) For bonds, a measure of the simple interest annual yield for investments with coupon rates and with maturities of one year or more. To … Financial and business terms
Coupon-eligible converter box — TV Converter Box Coupon Program URL https://www.dtv2009.gov/[dead link] … Wikipedia
Coupon (bond) — Uncut bond coupons on 1922 Mecca Temple (NY, NY, U.S.A.) construction bond A coupon payment on a bond is a periodic interest payment that the bondholder receives during the time between when the bond is issued and when it matures. Coupons are… … Wikipedia