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The interest coupon on a bond expressed as a percentage of its current price. Thus, a R1m bond with a coupon of 10% would earn R100 000 per annum, but if the price of the bond falls to R900 000 then the effective interest rate would rise to 11,11% (i.e. R100 000/R900 000 X 100). When interest rates are rising, bond prices fall to keep the effective interest rate competitive.