DEFINITION of 'Net Interest Cost (NIC)'
A mathematical formula that an issuer of bonds uses to compute the overall interest expense that is associated with their bonds, which they will have to pay. The formula for net interest cost (NIC) is based on the average coupon rate weighted to years of maturity, and is adjusted for any associated discounts or premiums.
BREAKING DOWN 'Net Interest Cost (NIC)'
Debt issuers sometimes use NIC to evaluate the bids from various underwriters and usually award the contract to the syndicate offering the lowest net interest.
However, it may be an incorrect method of selecting underwriters who could present a low NIC, but have a higher TIC (total interest cost) over the lifetime of the bond.
The NIC formula was created before the widespread use of computers and is a simple, straightforward calculation based on available bond information.

Bond
A debt investment in which an investor loans money to an entity ... 
Bond Purchase Agreement
A legally binding document between a bond issuer and an underwriter ... 
Discount Bond
A bond that is issued for less than its par (or face) value, ... 
American Callable Bond
A bond that can be redeemed by the issuer at any time prior to ... 
Premium Bond
1) A bond that is trading above its par value. A bond will trade ... 
Term To Maturity
The remaining life of a financial instrument. In bonds, it is ...

Professionals
ISSUING MUNICIPAL SECURITIES
Issuing Municipal Securities Prior to issuing any bonds, a municipal issuer must authorize the issuance of the bonds through a bond resolution and obtain a preliminary legal opinion. The bond ... 
Bonds & Fixed Income
How To Evaluate Bond Performance
Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk. 
Bonds & Fixed Income
Advanced Bond Concepts: Bond Type Specifics
Before getting to the allimportant subject of bond pricing, we must first understand the many different characteristics bonds can have. When it comes down to it, a bond is simply a contract ... 
Bonds & Fixed Income
Advanced Bond Concepts: Yield and Bond Price
In the last section of this tutorial, we touched on the concept of required yield. In this section we'll explain what this means and take a closer look into how various yields are calculated. ... 
Bonds & Fixed Income
Using Excel PV Function to compute Bonds PV
To determine the value of a bond today  for a fixed principal (par value) to be repaid in the future at any predetermined time  we can use an Excel spreadsheet. 
Retirement
Analyzing The Best Retirement Plans And Investment Options: Bonds
What they are: Debt securities in which you lend money to an issuer (such as a corporation or government) in exchange for interest payments and the future repayment of the bond’s face value. ... 
Investing Basics
What is a Premium Bond?
A premium bond is one that trades above its face or nominal amount. 
Bonds & Fixed Income
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Insurance
Municipal Bond Tips For The Series 7 Exam
Learn to distinguish between general obligation and revenue bonds to ace this test. 
Bonds & Fixed Income
Advanced Bond Concepts: Bond Pricing
It is important for prospective bond buyers to know how to determine the price of a bond because it will indicate the yield received should the bond be purchased. In this section, we will run ...

How do I use the holding period return yield to evaluate my bond portfolio?
Find out how to use the holding period return yield formula to evaluate the performance of bonds in your portfolio, and view ... Read Answer >> 
How do I calculate yield to maturity of a zero coupon bond?
Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than ... Read Answer >> 
Why do bond coupon rates vary so greatly?
Learn about the two major reasons that cause bond coupon rates to vary so dramatically and what role coupons play in the ... Read Answer >> 
How can I use the holding period return yield to determine whether or not I should ...
Find out how to use the holding period return yield formula to determine whether it is a good time to sell your bond based ... Read Answer >> 
How does a bond's coupon interest rate affect its price?
Find out why the difference between the coupon interest rate on a bond and prevailing market interest rates has a large impact ... Read Answer >> 
Which factors most influence fixed income securities?
Learn about the main factors that impact the price of fixed income securities, and understand the various types of risk associated ... Read Answer >>