4-4 Bonds WARNING The coupon rate IS NOT the discount rate used in the Present value calculations The coupon rate merely tells us what cash flow the bond will produce Since the coupon rate is listed as a %o, this misconception is quite common Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 4- 4 Irwin/McGraw-Hill Bonds WARNING The coupon rate IS NOT the discount rate used in the Present Value calculations. The coupon rate merely tells us what cash flow the bond will produce. Since the coupon rate is listed as a %, this misconception is quite common