DEFINITION of 'Coupon Equivalent Rate  CER'
A alternative calculation of coupon rate used to compare zerocoupon and coupon fixedincome securities.
Formula:
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BREAKING DOWN 'Coupon Equivalent Rate  CER'
Because the quoted rate of bonds is calculated according to face value, this rate for bonds issued at a discount is inaccurate for comparing them to other coupon bonds. It is more accurate to use the CER because it uses the investor's initial investment as the basis.
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