HTTP vs HTTPS The significance of S: Http or the hypertext transfer protocol is something we use when we access the internet. Though we seldom notice it if at all, it plays a very essential role.
This is because the interest rate risk (risk of missing out on higher interest rates) decreases the closer bonds get to their maturity dates. With that, let's use the Bond Value Calculator to calculate the price of a bond given its face value, coupon rate, market rate, and years-to-maturity. Next enter the current market rate and the number of years to maturity, then click the Calculate Bond Valuation button.
If the bond is priced in the market to equal Vbo, then the rate on the bond would be equal to the current yield: R = C/ Vbo. Thus, when a coupon bond has a long-term maturity (e.g., 20 years), then it is similar to a perpetuity, making its current yield a good approximation of its rate of return.