couponcoupon ratecouponscoupon paymentbond couponcoupon bondcoupon paymentsTalon (bearer bond)
A coupon payment on a bond is the annual interest payment that the bondholder receives from the bond's issue date until it matures.wikipedia
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A coupon payment on a bond is the annual interest payment that the bondholder receives from the bond's issue date until it matures.
The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.
The coupon rate (also nominal rate) is the yearly total of coupons (or interest) paid divided by the Principal (Face) Value of the bond.
bearer bondsbearer certificatesbearer securities
The origin of the term "coupon" is that bonds were historically issued in the form of bearer certificates.
zero-coupondiscount bondzero coupon bonds
Zero-coupon bonds are those that pay no coupons and thus have a coupon rate of 0%.
Cumulative average returndiscounted future returnsearning potential of money over time
Normally, to compensate the bondholder for the time value of money, the price of a zero-coupon bond will always be less than its face value on any date before the maturity date.
European sovereign debt crisisEurozone crisisEuropean sovereign-debt crisis
During the European sovereign-debt crisis, some zero-coupon sovereign bonds traded above their face value as investors were willing to pay a premium for the perceived safe-haven status these investments hold.
consumer creditconsumer lendingconsumer loan
Credit spread (option)credit spreads
term structure of interest ratesterm structureConstant-maturity treasury
CDOcollateralized debt obligationsCDOs
Consequently, coupon payments (and interest rates) vary by tranche with the safest/most senior tranches receiving the lowest rates and the lowest tranches receiving the highest rates to compensate for higher default risk.
Inverse floaterinverse floaters
An inverse floating rate note, or simply an inverse floater, is a type of bond or other type of debt instrument used in finance whose coupon rate has an inverse relationship to short-term interest rates (or its reference rate).
For example, in the case of a swap involving two bonds, the benefits in question can be the periodic interest (coupon) payments associated with such bonds.
floatersfloating ratefloating rate bonds
Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a quoted spread (also known as quoted margin).
cat bondscatastrophe bondscollateralised catastrophe reinsurance
If no catastrophe occurred, the insurance company would pay a coupon to the investors.
This is achieved by purchasing bonds and/or other fixed income securities (such as certificates of deposit) that can and usually are held to maturity to generate this predictable stream from the coupon interest and/or the repayment of the face value of each bond when it matures.
Troubled Assets Relief ProgramTARPTARP funds
The Treasury will have a set spending limit, $250 billion at the start of the program, with which it will purchase the assets and then either sell them or hold the assets and collect the coupons.
inflation-indexed bondsinflation indexedinflation indexed bonds
Daily inflation-indexed bonds pay a periodic coupon that is equal to the product of the principal and the nominal coupon rate.
Bond with asset warrant
The security offers a steady stream of income due to the payment of a high coupon rate.
reporepurchase agreementsrepo rate
Coupons (interest payable to the owner of the securities) falling due while the repo buyer owns the securities are, in fact, usually passed directly onto the repo seller.
convertible debtconvertible noteconvertible bonds
To compensate for having additional value through the option to convert the bond to stock, a convertible bond typically has a coupon rate lower than that of similar, non-convertible debt.
In the case when all future cash flows are positive, or incoming (such as the principal and coupon payment of a bond) the only outflow of cash is the purchase price, the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV).
creditworthinesscounterparty riskdefault risk
ConsolsConsol3% fixed interest government bonds
In 1752 the Chancellor of the Exchequer and Prime Minister Sir Henry Pelham converted all outstanding issues of redeemable government stock into one bond, Consolidated 3.5% Annuities, in order to reduce the coupon (interest rate) paid on the government debt.