What is coupon rate?

Definition of Coupon Rate, Coupon Rate Meaning - The Economic Times Definition: Coupon rate is the rate of interest paid by bond issuers on the bond’s face value. It is the periodic rate of interest paid by bond issuers to its purchasers. The coupon rate is calculated on the bond’s face value (or par value), not on the issue price or market value.

What is the difference between coupon rate and yield?

A bond's coupon rate is the rate of interest it pays annually, while its yield is the rate of return it generates. A bond's coupon rate is expressed as a percentage of its par value. The par value is simply the face value of the bond or the value of the bond as stated by the issuing entity.

How do you calculate a bond coupon rate?

A bond's coupon rate can be calculated by taking the sum of the security's annual coupon payments and dividing them by the bond's par value, then multiplied by 100 in order to be represented as a percent. The formula for coupon rate can be represented as:

What is a coupon rate for a fixed-income security?

A coupon rate for a fixed-income security represents an annual coupon payment that the issuer pays according to the bond’s par or face value. The coupon payment on a bond is the interest payment received by the holder of the bond until the bond matures.