Coupon Rate Calculator

Coupon Rate Formula

Coupon Rate = (Annual Coupon Payment / Face Value) * 100

Where:

• Annual Coupon Payment: The annual interest payment made by the bond.
• Face Value: The nominal value of the bond.

This formula helps investors understand the annual return generated by a bond relative to its face value.

Coupon Rate Meaning

The coupon rate, often expressed as a percentage, represents the annual interest payment made by a bond relative to its face value.

Investors use the coupon rate to assess the income potential of a bond. A higher coupon rate typically indicates higher income but may be associated with greater risk.

Conversely, a lower coupon rate may indicate lower risk but results in lower income. Understanding coupon rates helps investors make informed decisions when selecting bonds for their portfolios.