Dictionary

coupon

the interest rate on a fixed income security (eg a bond); the term for each interest payment made to the bondholder A $500 bond with a 4% coupon pays $20 a year. Two payments of $10 each would be made.
a ticket or document that can be redeemed (=exchanged) for a discount (=price reduction) when buying a product Our supermarket would never use loyalty cards to promote tobacco or baby milk, but we are planning to send out wine coupons.

Other

  • coupon rate|coupon percent rate

Phrase Bank

  • What is the coupon rate of the bond?
  • The government has issued a 12 per cent coupon rate bond.
  • This type of debt instrument (=promise to repay a debt = something owed) does not make coupon payments.
  • Please present the coupon at the time of purchase.
  • This coupon entitles you to a saving of 15%.
  • The coupon expires (=is no longer valid) on 31st December 2010.
  • The coupon of 8% will be paid to debenture holders semiannually (=twice a year).

Additional Notes

  • Some bonds actually have coupons attached to them that can be redeemed (=exchanged) for interest payments at regular intervals, hence the name coupon. This is no longer a common method of payment as most records are stored electronically.
  • The American colloquial phrase cutting coupons refers to these old paper coupons, when a person in need of cash would cut the coupon from the bond in order to redeem the bond.