What is coupon on bonds?
Nov 24, 12:11

Coupon rate on the bonds is nothing but the rate of interest paid by the issuers to the investors on the bond's face value. The coupon rate is the annualised interest amount. Coupon rate is calculated by taking the annual coupon payment and dividing it by the bond's face value. For instance, if you have a 10-year bonds worth Rs 5,000 having a coupon rate of 10%, then every year you will get Rs 500 till maturity, no matter what happens to the bond yield. The coupon rate is the specified interest rate on a bond, whereas yield-to-maturity is the actual return that's earned based on the current market price of the bond.

What is coupon on bonds