Definition: A zero-coupon bond, as the name suggests, it is a financial instrument which does not allow a regular interest payment to the investor.Moreover, it is a bond which is issued at a meagre market price (discounted price) in comparison to its face value. How to pronounce zero coupon bond. These detachable slips of paper are called coupons and represent the interest payments due to the bondholder. Definition: Coupon rate is the rate of interest paid by bond issuers on the bond’s face value. ‘The proceeds from selling the low coupon bonds and the strips left over from creating the coupon bond should exceed the amount paid for the high coupon bond.’ More example sentences ‘To compute the price of a coupon bond in terms of its stripped components, the prices of each payment were estimated using the term structure of observed bid yields for strips.’ Zero-Coupon Bond: Definition, Formula, Example etc. Even if your bond trades for less than $1,000 (or more than $1,000), the issuer is still responsible for paying you $50 per year. • COUPON BOND (noun) The noun COUPON BOND has 1 sense:. That definition assumes a positive time value of money. These coupons should not be confused with the coupons on bonds. Meaning of coupon bond with illustrations and photos. Coupons are physically attached to the bond and must be presented to the issuer to receive interest payments. Learn more. Pronunciation /ˈzirō ˈk(y)o͞oˌpän ˌbänd/ /ˈzɪroʊ ˈk(j)uˌpɑn ˌbɑnd/ See synonyms for zero-coupon bond. Alamgir. The bond issuer borrows capital from the bondholder and makes fixed payments to them at a fixed (or variable) interest rate for a specified period. Suppose you had a $1,000 face value bond with a coupon rate of 5 percent, which would equate to $50 a year in your pocket. Pronunciation of coupon bond and it's etymology. Definition: A coupon bond is a debt instrument that has detachable slips of paper that can be removed from the bond contract itself and brought to a bank or broker for interest payments. All Free. When the bond reaches maturity, its investor receives its par (or face) value. June 15, 2020 June 15, 2020 by Md. Keep in mind that some bonds do not pay interest at all. The second parameter need to describe a bond is the coupon rate. Related words - coupon bond synonyms, antonyms, hypernyms and hyponyms. Use the current yield to calculate the annual coupon payment. Definition: Coupon rate is the stated interest rate on a fixed income security like a bond. 2. 1. a bond issued with detachable coupons that must be presented to the issuer for interest payments Familiarity information: COUPON BOND used as a noun is very rare. Coupons are physically attached to the bond and must be presented to the issuer to receive interest payments. coupon - WordReference English dictionary, questions, discussion and forums. Learn more. For example, if the coupon rate is 8% and the bond's face value is $1,000, then the annual coupon payment is .08 * 1000 or $80. In other words, it’s the rate of interest that bondholders receive from their investment. Listen to the audio pronunciation in the Cambridge English Dictionary. Also known as a "zero-coupon bond." There would be less demand for the bond with a 5% coupon when the new bond pays 5.5%. Zero Coupon Bond Key Points: The word Coupon represents “Interest.” Interest is not paid for the invested amount. The coupon rate is calculated on the bond’s face value (or par value), not on the issue price or market value. Listen to the audio pronunciation in English. Each coupon has its maturity date printed on it. It’s based on the yield as of the day the bond is issued. Since a bond's coupon rate is fixed all through the bond's maturity, a bondholder is stuck with receiving comparably lower interest payments when the market is … A bond containing no ownership information and for which the physical bearer is presumed to be the owner. You would pay $3,066 for today, and, if you held it to maturity 20 years, you'd be paid $10,000. How to use bond in a sentence. What Does Coupon Rate Mean? If the bond sells today for 98 (meaning that it is selling at a discount for $980), the current yield is $50 divided by $980 = 5.10 percent. And it is redeemable on or after a specified maturity date at the par value itself. Read the bond's prospectus or otherwise research the bond to find its coupon rate. A bond that is issued at a deep discount to its face value but pays no interest. Strip Bond: A strip bond is a bond where both the principal and regular coupon payments--which have been removed--are sold separately. Coupon: The annual interest rate paid on a bond, expressed as a percentage of the face value. A coupon bond is a type of bond Bonds Bonds are fixed-income securities that are issued by corporations and governments to raise capital. Registra te stesso dicendo 'coupon bond' a frasi intere. Coupon bond - definition of coupon bond by The Free Dictionary. Both coupons and residues are known as strip bonds or as zero coupon bonds. Definition of coupon bond, with etymology, pronunciation (phonetic and audio), synonyms, antonyms, derived terms and more about the word coupon bond. Let us take the example of a bond with quarterly coupon payments. See more. Focus on one accent: mixing multiple accents can get really confusing especially for beginners, so pick one accent (US or UK) and stick to it. These "zero-coupon" bonds are sold at a deep discount to par when issued, but can be sold at their full … Example sentences containing coupon bond Examples. A zero coupon bond (also discount bond or deep discount bond) is a bond in which the face value is repaid at the time of maturity. Step #3: Finally, the formula of the coupon rate of the bond is calculated by dividing the annualized interest payments by the par value of the bond and multiplied by 100%, as shown below. Current yield is derived by taking the bond’s coupon yield and dividing it by the bond’s price. For example, the $1,000 bond mentioned above might pay an annual coupon payment at 3 percent. Define coupon bond. noun. Bond definition is - something that binds or restrains : fetter. Definition of coupon bond in the Fine Dictionary. 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