Coupon Definition

Coupon: The annual interest rate paid on a bond, expressed as a percentage of the face value.

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Coupon Rate Definition

Coupon rate is the yield paid by a fixed income security, which is the annual coupon payments divided by the bond's face or par value.

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Why Do Companies Print Coupons

Manufacturers and stores benefit from the coupons they offer to consumers. Loyalty cards are a form of coupon that allows stores to keep a record of scanned …

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Strip Bonds Definition

Strip Bond: A strip bond is a bond where both the principal and regular coupon payments--which have been removed--are sold separately. Also known as a …

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Discount Definition

Discount: In finance, discount refers to the condition of the price of a bond that is lower than par, or face value. The discount equals the difference between the …

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Promotion Expense Definition

A promotion expense is a cost companies incur to market their products or services to consumers. Companies engage in promotion expenses in order to boost sales and …

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Step-Up Bond Definition

A step-up bond is a bond that pays a lower initial interest rate but includes a feature that allows for rate increases at periodic intervals. The number and extent …

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Current Coupon Definition

Current Coupon: The to-be-announced (TBA) mortgage security of any issue for the current delivery month that is trading closest to, but not exceeding par value. TBA …

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Discount Margin—DM Definition

Discount Margin - DM: A discount margin (DM) is the average expected return earned in addition to the index underlying , or reference rate, of the floating rate …

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The Basics of Municipal Bonds

The most basic strategy for investing in municipal bonds is to purchase a bond with an attractive interest rate, or yield, and hold the bond until it matures. The …

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Paydown Definition

Paydown occurs when the amount a company or government repays in debt exceeds the amount it currently borrows. A paydown takes place when a company reissues unpaid …

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Buying a $1,000 Bond With a Coupon of 10%

These bonds typically pay out a semi-annual coupon. Owning a 10% ten-year bond with a face value of $1,000 would yield an additional $1,000 in total interest through …

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Debt Tender Offer Definition

A debt tender offer is a public solicitation to a company's bondholders requesting that they sell back their bonds or debt securities at a specific price and during a …

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Yield to Maturity vs. Coupon Rate: What's the Difference

The yield to maturity (YTM) is the percentage rate of return for a bond assuming that the investor holds the asset until its maturity date. It is the sum of all of its …

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Bond Yield Rate vs. Coupon Rate: What's the Difference

Coupon Pass: The purchase of treasury notes or bonds from dealers, by the Federal Reserve.

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Interest-Only Retirement: Can It Be Done

The Hidden Problem: Inflation . Over the past two decades, inflation has ranged from 0.1% to as much as 3.8% per year.   In our original scenario—the retiree with …

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Zero-Coupon Mortgage Definition

Zero-Coupon Mortgage: A form of commercial financing in which regular interest and principal payments are deferred until maturity, rather than paid over the course of …

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The 7 Best Debt Reduction Software Programs of 2021

The average household carries more than $9,000 in credit card debt. These debt reduction programs and apps help people craft a plan to dig their way out of debt once and …

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3 signs that it's time to sell your bonds

Expand. 1. Interest Rates Set to Rise. 2. The Issuer Seems Unstable. 3. The Market Price Is High. Investing can be tricky, even when it comes to so-called "safe" …

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Discount Bond Definition

James Chen, CMT, is the former director of investing and trading content at Investopedia. He is an expert trader, investment adviser, and global market strategist. A …

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How Does an Investor Make Money On Bonds

Making Money From a Coupon-Paying Bond. There are two ways that investors make money from bonds. The individual investor buys bonds directly, with the aim of holding …

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How Mail-In Rebates Rip You Off

How Mail-In Rebates Rip You Off. FACEBOOK TWITTER LINKEDIN By. Bobbi Dempsey. Full Bio. Bobbi Dempsey 18+ years of experience as a writer. She has written many books …

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How the Kohl's Credit Card Works: Benefits and Rewards

Kohl’s often offers cash-off coupons, such as $10 off purchases of $30 or more. These may be combined with other discounts, as well as Kohl’s rewards programs.

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How to Calculate Net Present Value (NPV) & Formula

Assume there is no salvage value at the end of the project and the required rate of return is 8%. The NPV of the project is calculated as follows: N P V = $ 5 0 0 ( 1 + …

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What is a stripped bond

And the purchaser of the coupons will pay $200 to receive $250, meaning they make $50 off the purchase. By providing this investment service, Ben's would receive a …

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12 Tips for Retiring With Just $50K Net Worth

Tim Parker has been a financial journalist for 11+ years, serving some of the largest and best-known media outlets in the world. Ebony Howard is a certified public …

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Advantages and Risks of Zero Coupon Treasury Bonds

Zero-coupon U.S. Treasury bonds have a poor risk-return profile when held alone. Long-dated zero-coupon Treasury bonds are more volatile than the stock market, but …

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Callable Bond Definition

A callable bond, also known as a redeemable bond, is a bond that the issuer may redeem before it reaches the stated maturity date. A callable bond allows the issuing …

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Investment Grade Definition

Gordon Scott has been an active investor and technical analyst of securities, futures, forex, and penny stocks for 20+ years. He is a member of the Investopedia …

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How to Calculate PV of a Different Bond Type With Excel

The bond provides coupons annually and pays a coupon amount of 0.025 x 1000 ÷ 2= $25 ÷ 2 = $12.50. The semiannual coupon rate is 1.25% (= 2.5% ÷ 2).

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Here's What Happens When a Bond Is Called

Then, the borrower decides to retire the bond. If the call premium is one year's interest, 10%, you'll get a check for the bond's face amount ($1,000) plus the premium …

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