Instructions

Determine the coupon rate. The amount of a bond’s coupon is determined when the bond is issued. To calculate the coupon rate (that is, the interest rate the bond was originally issued at) divide the coupon amount by the par value of the bond, then multiply by 100 to get the percentage. For example, if a $5,000 bond has a coupon of $375, the interest rate is ($375/$5000)x100, or 7.5 percent.

Figure the amount of the coupon using the coupon rate. If you know the coupon rate and want to determine the dollar amount of the coupon, simply take the percentage of the coupon rate times the face value of the bond. For example, if the coupon rate is 8 percent and it’s a $5,000 bond, the coupon is $400 per year.

References

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