The coupon rate is the fixed annual interest rate that a bond issuer pays to bondholders, calculated as a percentage of the bond's face value. It is set at the time of issuance and typically remains unchanged.
For example, if a bond has a face value of 1,000 taka and a coupon rate of 5%, the bondholder receives 50 taka per year in interest payments.
The coupon rate is directly related to a bond's market price. When market interest rates rise above the coupon rate, the bond's price drops. When market rates fall below the coupon rate, the bond's price rises.