Coupon
Fixed IncomeDefinition
The fixed annual interest rate a bond pays its holder, expressed as a percentage of face value. A 5% coupon on a $1,000 bond pays $50/year (typically split into $25 every 6 months).
Coupon is fixed at issuance and doesn't change with market conditions. As market rates move, the bond's price adjusts to make its yield-to-maturity match prevailing rates. That's why bond prices fall when rates rise.
Coupon is fixed at issuance and doesn't change with market conditions. As market rates move, the bond's price adjusts to make its yield-to-maturity match prevailing rates. That's why bond prices fall when rates rise.
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