Frequently Asked Questions

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Bond Terminologies

What are the differences between Coupon and Yield?


The Coupon or Coupon rate is the interest rate paid by fixed-interest security such as Bond/ Debenture. It is the annual payment towards the face value of a bond. The bond issuing company pays it to the bondholder. The yield is the effective interest rate on bonds. The yield will vary inversely with the market price of the Bond.
Yield= (Coupon/ Market Price of Bond) X 100

Coupon and Yield are explained here in 'Bond Glossary.'.