What is Coupon?
A bond's coupon is the interest it pays, set when the bond is issued. It is quoted as a yearly percentage of the bond's face value, so a 4% coupon on a $1,000 bond pays $40 a year, often in two payments of $20. For most bonds the coupon stays fixed for the bond's whole life.
Why Coupon matters
Because the coupon is fixed while market rates move, it explains why a bond's price has to change when rates change.