Plain-English definitions, reviewed by an independent investor
Coupon Rate
The coupon rate is a bond’s stated annual interest as a percentage of its face value.
The coupon rate is a bond’s stated annual interest as a percentage of its face value.
Coupon = Annual Interest ÷ Face Value × 100%
Why it matters
It defines the cash the bond pays each year.
Common confusion
The coupon is fixed at issue; the bond’s yield moves with the market price.
Frequently Asked Questions
Coupon vs yield?
Coupon is the fixed rate; yield reflects what you actually earn at today’s price.
Zero-coupon bond?
Pays no periodic interest; it is sold at a discount and repaid at face value.