The bond issuer's annual interest payment, expressed as a percentage of the bond's face value, is known as the coupon rate. For instance, if the coupon rate is 5%, bondholders will receive $50 each year.
What is the bond yield and coupon rate?
The annual interest rate paid on a bond is known as the coupon rate, while the yield is the rate of return it generates.The coupon rate of a bond is represented as a percentage of the bond's par value.Simply put, the bond's face value or the value as stated by the issuing entity is the par value.
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