Investing term

What is Coupon?

The fixed interest payment a bond issuer promises, usually expressed as an annual percentage of face value.

The coupon is the fixed interest a bond pays its holder, usually quoted as an annual percentage of the bond's face value and paid in installments. It's set when the bond is issued and doesn't change, which is why a bond's yield can drift away from its coupon as the bond's market price rises or falls.

For example

A $1,000 bond with a 5% coupon pays $50 a year — often as $25 every six months — regardless of what the bond later trades for.

Coupon is taught hands-on in Stage 4 — Stocks, Bonds, Cash & Alternatives.

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Related terms

AlternativesInvestments outside the core stocks/bonds/cash mix — REITs, commodities, gold, crypto.BondA loan from you to an issuer (government or company), repaid with interest on a known schedule.Capital gainThe profit from selling an investment for more than you paid.CommodityA raw physical good like gold, oil, wheat, or copper — priced by the ounce, barrel, or bushel.
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