coupon investment & finance definition

The interest payment that must be made on a note or bond until it matures. For example, a note with a 7 percent interest rate pays $70 annually on a $1,000 bond, which typically would be split into semiannual payments. The $70 is the coupon. The term coupon reflects the portion of a bond that the bond holder separates and presents to the bond issuer in order to obtain the interest payment the bearer is entitled to. This type of bond is called a bearer bond. In contrast, the name and address of the holder of a registered bond are known to the bond issuer.