Coupon 
 • (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. 
 • The periodic interest payment made to the bondholders during the life of the bond. 
 • (1) The annual rate of interest on the bond's face value that a bond's issuer promises to pay the bondholder. (2) A certificate attached to a bond evidencing interest due on a payment date. 
 • Is the contractual rate of interest on a credit instrument. 

 Embedded terms in definition 
 Bond Credit Face value Interest Issuer Payment date Rate of interest


 Referenced Terms 
 Accrued interest: Is the amount of interest which has accumulated since the last Coupon interest payment. It is the amount of interest which the holder is entitled but is not due until the payment date. The buyer pays the seller of the bond the accrued interest.The accumulated Coupon interest earned but not yet paid to the seller of a bond by the buyer (unless the bond is in default).Interest due from issue or from the last Coupon date to the present on an interestbearing security. The buyer of the security pays the quoted dollar price plus accrued interest.

 Accrued interest: Is the amount of interest which has accumulated since the last Coupon interest payment. It is the amount of interest which the holder is entitled but is not due until the payment date. The buyer pays the seller of the bond the accrued interest.The accumulated Coupon interest earned but not yet paid to the seller of a bond by the buyer (unless the bond is in default).Interest due from issue or from the last Coupon date to the present on an interestbearing security. The buyer of the security pays the quoted dollar price plus accrued interest.

 Accrued interest: Is the amount of interest which has accumulated since the last Coupon interest payment. It is the amount of interest which the holder is entitled but is not due until the payment date. The buyer pays the seller of the bond the accrued interest.The accumulated Coupon interest earned but not yet paid to the seller of a bond by the buyer (unless the bond is in default).Interest due from issue or from the last Coupon date to the present on an interestbearing security. The buyer of the security pays the quoted dollar price plus accrued interest.

 Adjustable rate mortgage: Is a loan which has a Coupon or interest rate that is subject to change on predetermined reset dates. These loans use interest rate indices as the benchmark rate. Adjustable Rate Mortgages come in many variations. Typically, the reset dates recur every 1, 3, or 5 years; but there are other periods used as well. These loans may have cap and floor features which constrain each reset change in interest rates. There may also be lifetime cap and floor features. Adjustable Rate Mortgages may be strictly amortizing though some have negative amortization features.A mortgage whose interest rate changes periodically based on the upward or downward movement of a specified benchmark, e.g. six month or oneyear Treasury bills.

 Back discount rate: Yield basis on which shortterm, noninterestbearing money market securities are quoted. A rate quoted on a discount basis understands bond equivalent yield. That must be calculated when comparing return against Coupon securities.


 Related Terms 
 