A coupon rate is the interest rate paid out on a bond. Coupon rate tends to identify that the market is up and more favorable at the time which means that the coupon holder will earn less than the previous market conditions. When the government or a company issue a bond, the rate is fixed. The coupon rate is annual percentage rate of the par or the face value of the bond. The par value is assigned at the time the security is issued which means it is the original price that a bond was issued at. Yield to maturity represents the rate at return that an investor earns on a bond. Yield to maturity is the total return anticipated on a bond if the bond is held until it matures and is considered a long-term bond yield. The yield to maturity factors in the value of money, whereas a simple current yield calculation does not. So therefore, it is often considered a more thorough means of calculating the return from a bond.

 

It I was the CFO, and the government raised the interest rates I would look for other ways to raise additional capital besides borrowing. I would possibly look into the company's insurance premiums and see if it would be possible to create some income that way. One thing I would definitely not due is add any other debt that is unnecessary while the rates are higher. I would also see if I could make some changes to any existing loans that I have to changed them from existing variable rate loans into fixed rate loans to keep from having the loans change according to the changes in the market. A fix rate loan would be more ideal as the rates will not change because they are fixed. If necessary to have borrow any funds I would search to ensure that I would receive the best interest rate that was possible.

Reference

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