Coupon

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Coupon

The coupon is a detachable portion of a bond that is given up in return for a payment of interest. The coupon is typically paid semiannually. This is also referred to as the "coupon rate" or "coupon percent rate."

Bonds made payable to bearer had certificates of interest, which could be cut from the bond and presented for payment. These pieces of paper cut off are the coupons. [1]

An unregistered, negotiable bond, bearer bond on which interest and principal are payable to the holder, regardless of whom it was originally issued to. The coupons are attached to the bond, and each coupon represents a single interest payment. The holder submits a coupon, usually semi-annually, to the issuer or paying agent to receive payment. Coupon bonds are being phased out in favor of registered bonds. [2]

From 1822, "certificate of interest due on a bond" [3] Denoting a detachable portion of a bond to be given up in return for payment of interest: from French, literally ‘piece cut off,’ from couper ‘cut [2]

References

  1. Wall Street words: an A to Z guide to investment terms for today's investor By David Logan Scott ISBN-10: 0618176519 pg 84
  2. [1]
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