# Coupon rate

From ACT Wiki

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