Coupon
The annual amount of the interest payment made to owners during the term of the bond. |
Similar financial terms
Coupon rateThe interest rate that the issuer of a bond agrees to pay each year to the bondholder. The coupon rate multiplied by the principal of a bond provides the nominal amount of the coupon. For example, a bond with a 5.1% coupon rate and a principal of $1,000 provides an annual interest of $51. The coupon rate is also referred to as the nominal rate.
Zero-coupon bonds
The holder of a zero-coupon bond realizes interest by buying the bond at a discount to its principal value. These bonds made their debut in the U.S. bond market in the early 1980s.
Deferred-coupon bonds
Bonds that let the issuer avoid using cash to make interest payments for a specified number of years. There are three types of deferred-coupon structures: (a) deferred-interest bonds, (b) step-up bonds and (c) payment-in-kind bonds.
Zero-coupon interest rate
The interest rate that would be earned on a bond that provides no coupons.
Zero-coupon convertible
A zero-coupon bond convertible into the common stock of the issuing company after the stock reaches a certain price, using a put option inherent in the security. It might as well refer to zero-coupon bonds, which are convertible into an interest bearing bond at a certain time before maturity.
Weighted average coupon
The weighted average of the gross interest rate of the mortgages underlying the pool as of the pool issue date, with the balance of each mortgage used as the weighting factor.
Pass-through coupon rate
The interest rate paid on a securitized pool of assets, which is less than the rate paid on the underlying loans by an amount equal to the servicing and guaranteeing fees.
Low-coupon bond refunding
Refunding of a low coupon bond with a new, higher coupon bond.
Long coupons
(a) Bonds or notes with a long current maturity. (b) A bond on which one of the coupon periods, usually the first, is longer than the other periods or the standard period.
Level-coupon bond
Bond with a stream of coupon payments that are the same throughout the life of the bond.
Coupon equivalent yield
True interest cost expressed on the basis of a 365-day year.
Coupon payments
A bond's interest payments.
Current coupon
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently offered on new bonds of a similar maturity and credit risk.
