Coupon Rate

Coupon rate

In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year.

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Coupon Rate

The interest rate that a bond pays to a bondholder, usually semi-annually. The coupon rate is stated on the bond. This is also called the nominal yield or the yield rate.

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Coupon rate. The coupon rate is the interest rate that the issuer of a bond or other debt security promises to pay during the term of a loan. For example, a bond that is paying 6% annual interest has a coupon rate of 6%.

The term is derived from the practice, now discontinued, of issuing bonds with detachable coupons.

To collect a scheduled interest payment, you presented a coupon to the issuer or the issuer's agent. Today, coupon bonds are no longer issued. Most bonds are registered, and interest is paid by check or, increasingly, by electronic transfer.