Par yield

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Par yield (or par rate) denotes in finance, the coupon rate for which the price of a bond is equal to its nominal value (or par value).[1] It is used in the design of fixed interest securities and in constructing interest rate swaps.

The par yield c for a n-year maturity fixed bond satisfies the following equation[2]

This can be more succinctly expressed with the prices of zero coupon bonds:

Here denotes the yield (on annual interest rate basis) of an -year zero-coupon bond, and denotes the price of an -year ZCB.

See also[edit]



  1. ^ G. Questa: Fixed income analysis for the global financial market Chapter 7 Section 4;
  2. ^ Martellini, Priaulet, Priaulet: Fixed-income securities, Wiley Finance, 2003