coupon

Coupon

The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually.

This is also referred to as the "coupon rate" or "coupon percent rate".

Notes:

For example, a $1,000 bond with a coupon of 7% will pay you $70 a year.

The reason it's called a "coupon" is because some bonds literally have coupons attached to them. Holders receive interest by stripping off the coupons and redeeming them. This is less common today as more records are kept electronically.

See also: Coupon Bond, Coupon Pass, Interest Rate, IO Strip, Zero Coupon Bond

---

Coupon

The contractual interest obligation a bond or debenture issuer covenants to pay to its debtholders.

---

coupon

1. The annual interest paid on a debt security. A coupon is usually stated in terms of the rate paid on a bond's face value. For example, a 9% coupon, $1,000 principal amount bond would pay its owner $90 in interest annually. A coupon is set at the time a security is issued and, for most bonds, stays the same until maturity.

2. The detachable part of a coupon bond that must be presented for payment every six months in order to receive interest. See also clip, coupon clipping.