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Simple English definitions for legal terms
interest coupon
Read a random definition: domestic creditor
A quick definition of interest coupon:
Interest coupon: An interest coupon is a certificate that is attached to a bond or other financial instrument. It can be detached and presented separately for payment of a specific amount of money at a certain time. It's like a little piece of paper that says "I am owed this much money on this date."
A more thorough explanation:
An interest coupon is a certificate that is attached to a bond or other financial instrument. It represents the interest or dividend payment that the holder of the bond is entitled to receive. The coupon can be detached and presented for payment at a specified time.
Suppose you own a bond that pays 5% interest annually. The bond has a face value of $1,000 and matures in 10 years. The bond also has 10 interest coupons attached to it, each representing a payment of $25. At the end of each year, you can detach one of the coupons and present it to the issuer of the bond to receive your $25 payment.
This example illustrates how interest coupons work. They allow bondholders to receive their interest payments periodically, rather than waiting until the bond matures.