The coupon rate (nominal rate, or nominal yield) of a
fixed income security
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the prin ...
is the interest rate that the issuer agrees to pay to the security holder each year, expressed as a percentage of the security's principal amount or par value. The coupon rate is typically stated in the name of the bond, such as "US Treasury Bond 6.25%". Unlike
current yield, it does not vary with the market price of the security.
Coupon rates are fixed for the life of the security, except in the case of
floating-rate bonds.
References
Bond valuation
Fixed income analysis
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