Bonds (18) Coupon rate

The common terms used in association with bonds

The following terms are associated with bonds and we need to understand what they mean in order to understand bonds.

Coupon rate


The coupon rate is the amount of interest the bondholder will receive periodically.

For example if the nominal value of the bond is $100,000 and the coupon rate is 7%, then

the bondholder will receive an annual interest of $7,000.

If the agreed periodic payment is every six months, then the bondholder will receive $3,500 every six months.