Coupon rate

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The nominal annual rate of interest on a security, expressed as a percentage of the principal amount.

Coupon rate example

The annual interest payable on a bond is 3.

The principal amount is 100.

Coupon rate = annual interest / principal

= 3 / 100

= 3%

Working in the other direction:

Coupon rate x principal = annual interest

For example:

3% x 100 = 3

See also