Coupon (finance)

In finance, a coupon is the interest payment received by a bondholder from the date of issuance until the date of maturity of a bond.^[1]

Coupons are normally described in terms of the "coupon rate", which is calculated by adding the sum of coupons paid per year and dividing it by the bond's face value.^[2] For example, if a bond has a face value of $1,000 and a coupon rate of 5%, then it pays total coupons of $50 per year. Typically, this will consist of two semi-annual payments of $25 each.^[3]