Coupon Payment

What is Coupon Payment?

A coupon payment is the fixed dollar amount of interest a bondholder receives at each payment date. The term comes from the era of paper bearer bonds that had physical coupons investors clipped and redeemed. Today, coupon payments are made electronically. The annual coupon equals face value times the coupon rate; for bonds that pay semi-annually — the US market convention — each payment is half the annual amount. Zero-coupon bonds make no periodic payments; instead they are issued at a discount and repay face value at maturity.