how are coupon rates affected by market interest rates 
a bond issuer decides on the coupon rate based on prevalent market interest rates among others at the time of the issuance market interest rates change over time and as they move lower or higher than a bond s coupon rate the value of the bond increases or decreases respectively since a bond s coupon rate is fixed all through the bond s maturity bonds with higher coupon rates provide a margin of safety against rising market interest rates 