The coupon rate is the actual interest that the seller pays, which may not equal the amount that the seller incurs for an expense.

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The coupon rate is the interest that the seller pays to the bondholders, expressed as a percentage of the face value of the bond. It does not necessarily correspond to the actual cost that the seller incurs for borrowing money or issuing the bond, as other factors such as market conditions, credit risk, and inflation expectations may affect the yield or effective interest rate of the bond. Therefore, the coupon rate is not always equal to the expense incurred by the seller, although it is a key determinant of the bond's pricing and profitability.

The Coupon Rate Is the Actual Interest That the Seller