Explain the following terms with reference to 'Bonds': Coupon rate Yield to Maturity Redemption value.

Terms with reference to Bonds Coupon Rate : The interest rate on the debt security is termed as coupon rate. (stated interest rate on a fixed income security / specified interest rate on a fixed maturity security which is fixed at the time of issue). Yield to Maturity : It represents the overall return on a debt security if it is retained till maturity with an assumption that all interest payments will be reinvested at the current yield on the security. It represents the total income one can receive on a debt security say a bond. (It is the theoretical internal rate of return earned by an investor who buys the bond today at the market price, assuming that the bond will be held till maturity and that all coupon and principal payments are made on schedule). Redemption value : The maturity value that a debt security holder (bond) may get. It may be at par value, at premium (higher than par value) or at a discount (less than par value).