multiply the yield to maturity times the face value....

Discussion in 'Financial Terms' started by Sacrisa, Mar 16, 2013.

  1. Sacrisa Junior Member

    Spanish
    "To calculate the coupon payment for coupon bonds, you multiply the yield to maturity times the face value of the bond."

    What is the meaning of times in this question?

    Lo que yo entiendo es: para calcular los pagos para un bono, multiplica la tasa del cupón ....el valor nominal del bono.

    ¿Quire decir que se multiplique la tasa del cupón por el valor nominal tantas veces como dure el bono, es decir, hasta su vencimiento?
     
  2. RicardoElAbogado Senior Member

    SF Bay Area, California
    American English
    The meaning of "times" here is exactly the sames as two times two equals four. Or multiplying two times three gives six.

    The English sentence, however, makes no financial sense. Is it accurately transcribed? Only occasionally does multiplying the yield to maturity times the face value of the bond give you the coupon payment. A more conventional statement would be

    To calculate the coupon payment for coupon bonds, you multiply the yield to maturity coupon rate times the face par value of the bond.

    The term "stated interest rate" could be substituted for "coupon rate" and "par value" is the same as "face value," but "par value" is more often used in financial writing. And you could even say "nominal value," but that is much less common.

    On the other hand, "face value" might be used to explain the topic to someone who does not know anything about bonds, which is what I suspect the text you're translating is doing.

    I think that el valor nominal is a good translation for par value (or face value).

    The phrase "the coupon payment" is ambiguous. Usually, a coupon refers to the dollar amount of each payment of interest. For most bonds, interest is paid twice a year, so the individual coupon payment is half the coupon rate (of interest) times (that is, multiplied by) the par value of the bond. If phrase "the coupon payment" means the total amount of interest collected for a year, then it would be the coupon rate (of interest) times the par value of the bond.

    Your translation (hasta su vencimiento) suggests that you calculate the coupon payment by multiplying the coupon rate (of interest) by the par value until maturity, which does not make sense. If the concept of "coupon payment" means the value of all the coupons that will be paid on the bond until maturity (which is not a common way to discuss bonds), then you need to include the concept of "years" to maturity (taking into account partial years).
     
  3. jcwoos Senior Member

    english
    "Times" es "por".

    El enunciado está hablando de como calcular cuanto el bonoteniente va a recibir por cada cupón en su vencimiento. Si solamente hay un cupón por año, el calculo va a ser la taza nominal multiplicada por el importe del bono.

    Estoy de acuerdo con Ricardo que el enunciado está incorrecto en como aplica la taza efectiva en lugar de la taza nominal para calcular los intereses. Tu traducción está correcta matemáticamente pero no es lo que dice el enunciado en Ingles.
     
  4. Sacrisa Junior Member

    Spanish
    Muchas Gracias!!!! :)
     

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