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Coupon bond

Coupon bond Definition

A bond that pays the holder of the bond a fixed interest payment (a coupon payment) every year until the bond reaches maturity. It was named a coupon payment, because a bondholder used to have to obtain their interest payment by clipping a coupon off of a bond and send it to the bond issuer, who then sent the bondholder the payment. Today, this process is no longer necessary for most coupon bonds. Examples of coupon bonds include; Treasury bonds, Treasury notes and corporate bonds.




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