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Investing

Coupon

What is Coupon?

The annual interest a bond pays, stated as a percentage of its face value.

Understanding Coupon

A bond's coupon rate is fixed when the bond is issued. Payments are usually made twice a year.

The coupon does not change when the bond's market price changes, which is why yield and coupon differ.

Formula

Annual coupon=Coupon rate×Face value\text{Annual coupon} = \text{Coupon rate} \times \text{Face value}
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