What is the difference between coupon rate and market rate?
Andrew Campbell
Updated on January 03, 2026
A coupon rate is a fixed rate of return attached to the face value of the bond paid to the purchaser from the seller, while the market interest rate can change dramatically throughout the lifespan of the bond.
What is the meaning of rate of bond?
Bond yield is the return an investor realizes on a bond. The bond yield can be defined in different ways. Setting the bond yield equal to its coupon rate is the simplest definition. More complex calculations of a bond’s yield will account for the time value of money and compounding interest payments.
How does bond value relate to market rate?
Bonds and interest rates: an inverse relationship. All else being equal, if new bonds are issued with a higher interest rate than those currently on the market, the price of existing bonds will decline as demand for those bonds falls.
What is a market rate of interest?
The market rate, defined as the rate of interest, on a loan or investment, which is commonly available on the market for that product, defined the cost of benefit of the tool. For a loan, the market rate is the average rate of interest that will be charged to the receiver from a variety of providers.
What is meant by discount rate?
The discount rate is the interest rate used to determine the present value of future cash flows in a discounted cash flow (DCF) analysis. This helps determine if the future cash flows from a project or investment will be worth more than the capital outlay needed to fund the project or investment in the present.
What is bank market rate?
The market interest rate is the prevailing interest rate offered on cash deposits. This rate is driven by multiple factors, including central bank interest rates, the flow of funds into and out of a country, the duration of deposits, and the size of deposits.
What is another name for market price?
What is another word for market price?
| retail price | flash price |
|---|---|
| list price | selling price |
| standard price | sticker price |
| sale price |
What is the difference between market rate and bank rate?
Bank Rate is usually higher than Repo Rate as it is an important tool to control liquidity. Also known as “Discount Rate”, Bank Rate is often confused with Overnight Rate. When Bank Rate is increased by RBI, bank’s borrowing costs increases which in return, reduces the supply of money in the market.
