Coupon rate
The annual percentage of par the issuer promises to pay: it fixes the size of the coupon, not the return on the investment.
Formula
c = \frac{\text{Annual coupon}}{\text{Par value}}The rate is written into the terms of the issue and does not depend on the market price. Yield moves; the coupon stays where it was.
How to read the number
The figure answers how much money the bond will pay, not how much the person who bought it will earn.
When the metric lies
Issues cannot be ranked by coupon rate. A generous coupon bought above par delivers less than the rate advertises, because redemption takes the difference back.
Also known as: nominal coupon rate, stated coupon