Coupon Payment

Definition: A Coupon Payment is the periodic interest payment a bond issuer makes to the bondholder, calculated as Face Value × Coupon Rate × (Days in Period /…

A Coupon Payment is the periodic interest payment a bond issuer makes to the bondholder, calculated as Face Value × Coupon Rate × (Days in Period / Days in Year). For a typical US corporate bond paying semiannual coupons, the periodic payment is Face Value × Annual Coupon Rate / 2. The coupon rate is set at issuance and remains fixed (for fixed-rate bonds) over the life of the bond. The stream of coupon payments plus the face value at maturity is discounted at the market yield to determine the bond's price.