The coupon rate is the interest rate that a bond issuer agrees to pay bondholders. It is expressed as a percentage of the bond's face value, which is the amount the issuer will repay at maturity. For example, if a bond has a face value of $1,000 and a coupon rate of 5%, the bondholder will receive $50 annually until the bond matures. This rate is important for investors because it helps determine the bond's yield and overall return. A higher coupon rate generally indicates a higher return, but it may also reflect higher risk associated with the issuer, such as a company or government entity.