rate in a gnc coupons 20 off 50 sentence. Zero-coupon bonds only make the payment of the face value on the maturity date. Coupon rates are relevant to the face value or par value of a bond. Market interest rates change over time and as they move higher or lower than a bond's coupon rate, the value of the bond increases or decreases, respectively. See also, matching words, words containing the letters c, words containing the letters c,o. Imagine you buy a bond with a face value of 1,000, and you receive two 25 interest payments.
This would make total annual coupon payments equal to 250. For an investor, a bonds yield to maturity matters more than its coupon rate. This is the effective return called yield to maturity. It is essentially the yield that a bond pays on its issue date. A bond issuer decides on the coupon rate based on prevalent market interest rates, among others, at the time of the issuance. This yield changes as the value of the bond changes, thus giving the bond's yield to maturity. A yield to maturity calculation factors in the coupon rate.