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In finance, the coupon rate is the annual rate of interest paid on a bond or note. The coupon rate is determined by the by the value of the bond and the coupon payment. The coupon rate is fixed at the time the bond is issued and remains at that rate during the life of the bond. It is also called the coupon yield.

If the bond value is $1000 and the coupon payment is $150, the coupon rate is 15% ($150/$1000=.15). This $150 is the yearly "rent" on the $1000 loan.


sources: Essentials of Managerial Finance textbook and www.investorwords.com

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