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Coupon
Term category: Bonds
In 10 words or less: The interest rate on the bond when it is issued.

Definition: The coupon rate is the interest rate on a bond when it's issued.  So, for example, if a $1000 bond has a 10% coupon, you'd receive $100 per year in interest.

StockJargon Advice: Saying a bond has a 10% coupon doesn't necessarily mean that the investor can only earn a 10% annual return.  In reality, bonds are trading at prices different than their par values.  For this reason, the Yield-to-Maturity can be considerably higher if the bond is trading for a big enough discount.

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Related Books

The Bond Book by Annette Thau
Wall Street Journal Guide to Understanding Money and Investments by Kenneth M. Morris
How the Bond Market Works by Robert Zipf
Beating the Dow with Bonds By Michael B. O'Higgins

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