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LSDefine
Simple English definitions for legal terms
coupon note
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A quick definition of coupon note:
A coupon note is a written promise to pay money to someone else. It's like a special kind of paper that has little pieces attached to it that you can use to get paid a little bit at a time. There are many different kinds of notes, like ones that have to be paid all at once or ones that are backed up by something valuable. Sometimes people write notes to explain things or to remember something important.A more thorough explanation:
A coupon note is a type of promissory note that has attached interest coupons that the holder can present for payment as each coupon matures. A promissory note is a written promise by one party to pay money to another party or to bearer. It is a two-party negotiable instrument, unlike a draft which is a three-party instrument.
- Floating-rate note: A note carrying a variable interest rate that is periodically adjusted within a predetermined range, usually every six months, in relation to an index, such as Treasury bill rates.
- Balloon note: A note requiring small periodic payments but a very large final payment. The periodic payments usually cover only interest, while the final payment (the balloon payment) represents the entire principal.
- Coupon note: A note with attached interest coupons that the holder may present for payment as each coupon matures.
The examples illustrate the different types of promissory notes. A floating-rate note has a variable interest rate that changes periodically, while a balloon note has small periodic payments and a large final payment. A coupon note has attached interest coupons that the holder can present for payment as each coupon matures.