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Floating-rate bonds have a coupon rate that is adjusted with current market interest rates
What is coupon rate?
A coupon is the interest payment received by a bondholder from the date of issuance until the maturity date of the bond. Coupons are typically defined in terms of the "coupon rate," which is derived by adding the total amount of coupons paid per year and dividing it by the face value of the bond.
The coupon rate of a bond in relation to market interest rates has a significant impact on how bonds are priced. When a coupon is greater than the current interest rate, the bond's price rises; when the coupon is less, the bond's price falls.
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