Bond Cash Flows

The Coupon Bond

A fixed-rate bond pays deterministic coupons each period and returns principal at maturity.

highlighted = computed this step

Cash-flow structure

A $1,000.00 bond with a 10% annual coupon pays $100.00 at periods 1, 2, and 3, plus principal at maturity: $1,100.00.

10% on $1,000.00: $100.00 each period, principal $1,100.0010\%\text{ on }\$1,000.00\text{: }\$100.00\text{ each period, principal }\$1,100.00
Coupon bond cash flowsScheduled payments at each period. 0123$100.00$100.00$1,100.00

Assumptions

Cash flows are at fixed annual periods and use exact cent arithmetic. This model is deterministic and does not include default risk, taxes, or fees.

fixed schedule, no default risk, taxes, or fees modeled\text{fixed schedule, no default risk, taxes, or fees modeled}