It is never higher than yield to maturity. So in simplest terms, the coupon is the amount of fixed interest the bond will earn coupon rate vs yield to worst year. Beginning bond investors have a significant learning curve ahead of them that can be pretty daunting, but they can take heart in knowing that it's manageable when it's taken in steps.
If the bond is called, you will get your money back, but you'll miss out on two years of interest payments. Conversely, yield to maturity will be higher than the coupon rate when the bond is purchased at a discount. Continue Reading.
Next, since you bought the bond for a premium, we need to account for this contribution to the total yield. A put provision gives the holder the right to sell the bond back to the company at a certain price at a specified date.