Coupon Equivalent Rate - CER

What Does Coupon Equivalent Rate - CER Mean?
A alternative calculation of coupon rate used to compare zero-coupon and coupon fixed-income securities.

Formula:

Investopedia explains 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.

Related Terms

Coupon
Coupon Equivalent Yield
Discount
Face Value
Fixed-Income Security
Market Value
Zero-Coupon Bond
More Related Terms

Related Links

Bond Basics Tutorial - Investing in bonds - What are they, and do they belong in your portfolio?
Advanced Bond Concepts - Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.

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