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Coupon Rate

The coupon rate is the interest payed on the bond as an annual percentage of the par value, which is different from the yield (coupon payment / market price).

The coupon payment is the dollar amount paid each period to the holder of the bond.

Zero coupon bonds do not pay interest but are sold at a discount providing capital gain when they are redeemed.

Floating-rate bonds have a coupon payment that varies over time. Its interest rate is tied to a benchmark such as T-bills, LIBOR, the fed funds or prime rate; some have a cap and/or floor, a maximum or minimum interest payment.

Coupon is legacy term from when interest was paid on detachable coupons that came with the bond note. Bond holders would receive their interest by removing the coupons and redeeming them.