LOADING
The annual interest rate paid by a bond, expressed as a percentage of the face (par) value.
A bond with a $1,000 face value and a 5% coupon rate pays $50 per year, typically in two semiannual payments of $25. The coupon rate is fixed at issuance and does not change over the bond's life (for fixed-rate bonds). However, the bond's market price fluctuates so that its effective yield reflects current interest rates. If interest rates rise above the coupon rate, the bond trades at a discount (below par). If rates fall below the coupon, the bond trades at a premium (above par).