: What is the coupon percentage of a perpetual bond specified relative to? In "a 10% bond", I have been told 10% means the coupon rate of the bond relative to the par value not the price when it was bought. But in "a 10% perpetuity",

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There is a British bond that pays interest in perpetuity, but never principal, called a consol bond.

Let's say that this consol bond was issued with a 10% coupon, of 100 pounds a year, for 1000 pounds. That ORIGINAL value would be its par value.

Let's say that today, the market interest rate has fallen to 5%. Then a consol with a 100 pound a year coupon would be worth 2000 pounds in today's market. But its PAR value would still be 1000 pounds.

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There does exists a par value for every bond, even for a perpetuity. The 10% has to be off something, the par value of the bond.

The 10% is specified with respect to the par value of the bond, and not on the amount lend by the lenders to the issuer of the bond. Perpetual bonds have a par value, which the issuer pays out as mentioned in the callable schedule when he exercises the option, callable which exists on most perpetual bonds issued, to buy back its issued bonds.