LONDON - The Asian Infrastructure Investment Bank (AIIB) has initiated a pre-stabilization period for its new USD 1 billion bond due May 21, 2035, with a semi-annual coupon rate of 4.50%.

Let's say you buy a bond with a face value of $1,000 and a coupon rate of 5%, so the annual interest payments are $50. The bond matures in 10 years, but the issuer can call the bond for face value ...

Using the $1,000 bond mentioned above, you can easily calculate the coupon rate of 2.5% by dividing the annual coupon payment by the face value of the bond; $25 divided by $1,000 is 2.5%.