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Which is Better: Discount or High Coupon Rate?

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Calculate your rate of return, before and after taxes, for a discounted bond and high-coupon bond.

Which is better: discount or high coupon rate?

Type of bond
DiscountHigh rate
Municipal: not state tax-exempt
Municipal: state tax-exempt
Treasury security
Corporate or other

Price you paid (% of face value)
Face value
Coupon rate
Months until maturity

Your coupon income is:

Months until you sell bonds
Market rate when you sell
Your federal tax rate
Your state tax rate

Information and these calculators are made available by one or more third party service providers. All examples are hypothetical and are for illustrative purposes. SunTrust Bank and its affiliates do not provide legal or tax advice. Information provided and these calculators are not intended to offer any tax, legal, financial or investment advice. SunTrust cannot guarantee that the information provided or the calculators are accurate, complete, or timely. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. SunTrust makes no warranties with regard to these calculators or the results obtained by their use. SunTrust disclaims any liability arising out of your use of, or any tax position taken in reliance on, these calculators. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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