Implied Rate

Categories: Bonds

"The bond pays 60 bucks a year." That's all you know.

Well, actually, you also know that the bond is trading "at par," or its standard price of $1,000 a unit. So if it costs you a grand to buy 60 bucks a year in interest, then the implied rate of interest of the bond is 6%.

Find other enlightening terms in Shmoop Finance Genius Bar(f)