The coupon rate is the interest rate based on the initial value of the bond at issue. As the price of the bond rises or falls the actual amount of interest paid does not change but the rate paid, which is based on the actual purchase price of each bond, will change.
Example: $100 bond with a coupon rate of 10% will pay $10 interest each year. If I can buy that bond for $50 I will receive $10 interest which is a rate of return of 20% based on my purchase price.
