What is a Coupon Bond?
Coupon bonds are a type of bond issue that offers the benefit of receiving an interest payment on a semi-annual basis. This is in contrast to other types of negotiable bond issues, where the payment of interest may take place on an annual or biannual basis, or even be delayed until the bond reaches full maturity. With a coupon bond, the interest payments are provided on a more frequent basis, with the face value of the bond paid in full at the time that the bond reaches maturity. One obvious advantage of a coupon bond is that it helps to create a steady source of revenue for the bondholder during a given calendar year. Depending on the structure of the actual bond issue, the amount or coupon of the interest payment will vary. Some negotiable bonds of this type allow for a fixed coupon payment, while others allow for a variable coupon payment based on a floating system of calculating the interest due at a given point in time. When it comes to the rate of interest that can be earned with
