In other words, the issuer's creditworthiness and current interest rates both have an impact on the coupon rate.
The coupon rate and market price of a bond are both directly impacted by the current interest rate.
A bond's annual payments are totaled up and divided by the bond's face value (also known as its "par value") to determine the coupon rate. Credit risk is the biggest factor influencing corporate bond interest rates after current interest rates.
Bond prices increase when a coupon is more than the current interest rate; prices decrease when a coupon is lower. Most bonds include fixed coupon rates that don't fluctuate with the national interest rate or the state of the economy.
Bonds with lower coupon rates typically have a larger interest rate risk than bonds with higher coupon rates of the same type.
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