17 May 2015

DEFINITION of ‘Coupon’
The interest rate stated on a bond when it’s issued. The coupon is typically paid semi-annually.

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

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

It is called a “coupon” 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.</P.

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