What is Coupon Rate?
The coupon rate is the annual interest rate paid by a bond on its face value — the fixed income component that bondholders receive periodically.
Formula
Coupon Payment = Face Value × Coupon Rate. Semi-annual = divide by 2.
How to Interpret
Coupon rate is fixed at issuance. When market rates rise, existing bonds with lower coupons become less attractive, pushing their price down.
Typical Ranges
Government: 5-8%, Corporate AAA: 7-9%, High yield: 10-14% in India.