Coupon Rate

The Coupon Rate is the annual interest rate paid by a bond issuer on the bond's face (par) value, expressed as a percentage. For example, a bond with a face value of ₹1,000 and a coupon rate of 7% pays ₹70 annually. The coupon rate is fixed at the time of issuance and does not change over the bond's life. However, as market interest rates fluctuate, the bond's market price adjusts so that its effective yield aligns with prevailing rates. The coupon rate is a fundamental metric for evaluating fixed-income investments.