How Are Savings Bond Rates Determined?

The interest rate on bonds is the interest rate paid by the government, banks, and enterprises to bond purchasers in the international and domestic financial markets by issuing bonds. Classification of bond interest rates: According to the place of issue, it can be divided into international bond rates and domestic bond rates. According to the issuer, it can be divided into national bond interest rate, financial bond interest rate and corporate bond interest rate. Bond interest rates are subject to bank deposit rates. Generally, bond rates are higher than bank deposit rates due to poor liquidity. In addition, the bond interest rate should be part of the benefit of raising funds, so the bond interest rate should not be higher than the average profit rate. The inequality is expressed as: Deposit interest rate <bond interest rate <average profit rate. Inside various types of bonds, from the perspective of security. Corporate bonds are not as good as financial bonds, and financial bonds are not as good as state bonds. From the perspective of liquidity, national bonds lack liquidity because of long maturity, and financial bonds and corporate bonds are more liquid than national bonds. Therefore, the national bond rate should be higher than the financial bond rate, and the corporate bond rate should be higher than the national bond rate. Expressed by inequality: Bank deposit interest rate <financial bond interest rate <national bond interest rate <corporate bond interest rate <average profit rate. In China, the interest rate on national bonds, including public bond rates and Treasury bill rates; financial bond rates are the rates determined when several commercial banks, such as Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank, issued bonds; corporate bond rates It is up to the enterprise to decide, and the state controls the upper limit. ^[1]

Bond rate

Right!

The interest rate on bonds is the interest rate paid by the government, banks, and enterprises to bond purchasers in the international and domestic financial markets by issuing bonds. Classification of bond interest rates: According to the place of issue, it can be divided into international bond rates and domestic bond rates. According to the issuer, it can be divided into national bond interest rate, financial bond interest rate and corporate bond interest rate. Bond interest rates are subject to bank deposit rates. Generally, bond rates are higher than bank deposit rates due to poor liquidity. In addition, the bond interest rate should be part of the benefit of raising funds, so the bond interest rate should not be higher than the average profit rate. The inequality is expressed as: Deposit interest rate <bond interest rate <average profit rate. Inside various types of bonds, from the perspective of security. Corporate bonds are not as good as financial bonds, and financial bonds are not as good as state bonds. From the perspective of liquidity, national bonds lack liquidity because of long maturity, and financial bonds and corporate bonds are more liquid than national bonds. Therefore, the national bond rate should be higher than the financial bond rate, and the corporate bond rate should be higher than the national bond rate. Expressed by inequality: Bank deposit interest rate <financial bond interest rate <national bond interest rate <corporate bond interest rate <average profit rate. In China, the interest rate on national bonds, including public bond rates and Treasury bill rates; financial bond rates are the rates determined when several commercial banks, such as Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank, issued bonds; corporate bond rates It is up to the enterprise to decide, and the state controls the upper limit. ^[1]

The denominator adds the difference between the purchase price and the face price, and the formula is interest / [market price + (buy price-face price)]