Coupon Payment
A coupon payment is a periodic interest payment made by a bond issuer to the bondholder. The coupon payment is a fixed amount, usually paid twice a year, and is determined by the coupon rate, which is set at the time the bond is issued. The coupon rate is expressed as a percentage of the bond’s face value. The coupon payment is calculated by multiplying the coupon rate by the face value of the bond.
History of Coupon Payment
The concept of coupon payments originated in the early 19th century when bonds were issued with physical coupons attached. The bondholder would present the coupon to the issuer in exchange for the interest payment. This practice was eventually replaced by electronic payments, but the term “coupon payment” remains in use today.
Comparison Table
| Term | Definition |
|---|---|
| Coupon Payment | Periodic interest payment made by a bond issuer to the bondholder. |
| Coupon Rate | Percentage of the bond’s face value set at the time the bond is issued. |
| Face Value | The amount of money a bond is worth at maturity. |
Summary
A coupon payment is a periodic interest payment made by a bond issuer to the bondholder. The coupon payment is calculated by multiplying the coupon rate by the face value of the bond. The coupon rate is expressed as a percentage of the bond’s face value and is set at the time the bond is issued. For more information about coupon payments, visit websites such as Investopedia, The Balance, and Investing Answers.
See Also
- Bond
- Yield
- Maturity
- Interest Rate
- Face Value
- Coupon Rate
- Par Value
- Yield to Maturity
- Interest Payment
- Bond Indenture
