Coupon rate
The yield to maturity will be 5% since both Face Value and Redemption value are same. If you purchase the bond for 95 or 105 your yield to maturity will change than what the coupon rate is.
Interest rate risk is measured by time to maturity and coupon rate
The "Coupon"
Most bonds have two parts: the coupons and the corpus. The corpus represents the principal; the coupons the interest. Coupons have redemption dates printed on them; you turn in your coupon to receive the interest payment.
Coupon rate
The yield to maturity will be 5% since both Face Value and Redemption value are same. If you purchase the bond for 95 or 105 your yield to maturity will change than what the coupon rate is.
milk, water & food
Coupon rate is something that is paid semiannually. The interest rate is something that starts as soon as a bond is issued.
The interest rate paid on a bond is known as the coupon rate. A $1,000 fixed rate bond with a 5% coupon rate purchased at par would yield $50 annually in interest payments.
Coupon rate is simply just the annual coupon payments paid by the issuer relative to the bond's face or par value.Coupon rate can be calculated by dividing the sum of the security's annual coupon payments and dividing them by the bond's par value. For example, a bond which was issued with a face value of $1000 that pays a $25 coupon semi-annually would have a coupon rate of 5%.Source: investopedia
The difference between the coupon rate and the required return of a bond is dependent upon the type of bond. Junk bonds will have the biggest difference between its return and the coupon rate.
FRN are bonds that have variable coupon. The Floating Rate Notes are calculated by adding the spread to the fixed reference rate for that day.
The zero coupon bond is more sensitive to change in rate (inflation) because the market value is not based on a fixed coupon.
When market interest rates exceed a bond's coupon rate, the bond will:
80 percent
When the yield of a bond exceeds it coupon rate, the price will be below 'par' which is usually $100.