What is the difference between Yield & Coupon Rate?

In accounting, there are two words that may be heard. They are the yield and coupon rate. Both of these words are different in their meaning and how they are used when talking about investments. However, they are related to one another, but they are not synonyms for each other. Instead, the coupon rate refers to the amount of the interest that has been stated for a bond.

It could also be for an item that has fixed income security. The yield determines the interest for that bond based on the day that the bond was purchased or issued. Therefore, the coupon rate and yield are not interchangeably based on their definitions. However, the coupon rate relies on the yield.