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Par yield (or par rate) denotes in finance, the coupon rate for which the price of a bond is equal to its nominal value (or par value). It is used in the design of fixed interest securities and in constructing interest rate swaps.

The par yield c for a n-year maturity fixed bond satisfies the following equation

$\frac{100c}{1+R(0,1)}+\frac{100c}{(1+R(0,2){)}^2}+\cdots +\frac{100+100c}{(1+R(0,n){)}^n}=100.$

This can be more succinctly expressed with the prices of zero coupon bonds:

$c=\frac{1-P_n}{\sum _{k=1}^n{P}_k}$

Here $R(0,m)$ denotes the yield (on annual interest rate basis) of an $m$-year zero-coupon bond, and $P_m$ denotes the price of an $m$-year ZCB.

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