Coupon Rate

A coupon rate is the yield paid by a fixed-income security; a fixed-income security's coupon rate is simply just the annual coupon payments paid by the issuer relative to the bond's face or par value. The coupon rate, or coupon payment, is the yield the bond paid on its issue date. This yield changes as the value of the bond changes, thus giving the bond's yield to maturity. A coupon rate is the yield paid by a fixed-income security.

Formula:

Coupon rate or nominal yield = annual payments ÷ face value of the bond

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