[koo-pon, kyoo-] 
| 1. | a portion of a certificate, ticket, label, advertisement, or the like, set off from the main body by dotted lines or the like to emphasize its separability, entitling the holder to something, as a gift or discount, or for use as an order blank, a contest entry form, etc. |
| 2. | a separate certificate, ticket, etc., for the same purpose. |
| 3. | one of a number of small detachable certificates calling for periodic interest payments on a bearer bond. Compare coupon bond. |
| 4. | Metallurgy. a sample of metal or metalwork submitted to a customer or testing agency for approval. |
[kyoo-pon] with an unhistorical y-sound not justified by the spelling. This pronunciation is used by educated speakers and is well-established as perfectly standard, although it is sometimes criticized. Its development may have been encouraged by analogy with words like curious, cupid, and cute, where c is followed by a “long u” and the [y] is mandatory.| cou·pon (kōō'pŏn', kyōō'-) n.
[French, from Old French colpon, piece cut off, from colper, to cut, from colp, blow; see coup.] Word History: A Roman might have had difficulty predicting what would become of the Latin word colaphus, which meant "a blow with the fist." In Old French, a language that developed from Latin, the Late Latin word colpus, derived from colaphus, became colp, or modern French coup, with the same sense. Coup has had a rich development in French, gaining numerous senses, participating in numerous phrases, such as coup d'état,) and giving rise to many derivatives, including couper, "to divide with a blow or stroke, to cut." Couper yielded the word coupon, "a portion that is cut off," which came to refer to a certificate that was detachable from a principal certificate. The detachable certificate could be exchanged for interest or dividend payments by the holder of the principal certificate. Coupon is first recorded in English in 1822 with this sense and then came to apply to forms or tickets, detachable or otherwise, that could be exchanged for various benefits or used to request information. |
Coupon
The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually.
This is also referred to as the "coupon rate" or "coupon percent rate".
Investopedia Commentary
For example, a $1,000 bond with a coupon of 7% will pay you $70 a year.
The reason it's called a "coupon" is because some bonds literally have coupons attached to them. Holders receive interest by stripping off the coupons and redeeming them. This is less common today as more records are kept electronically.
Related Links
Bond Basics Tutorial
Advanced Bond Concepts
See also: Coupon Bond, Coupon Pass, Interest Rate, IO Strip, Zero Coupon Bond
Also spelled: CPR
coupon
The annual interest paid on a debt security. A coupon is usually stated in terms of the rate paid on a bond's face value. For example, a 9% coupon, $1,000 principal amount bond would pay its owner $90 in interest annually. A coupon is set at the time a security is issued and, for most bonds, stays the same until maturity.
The detachable part of a coupon bond that must be presented for payment every six months in order to receive interest. See also clip, coupon clipping.