TeachMeFinance.com - explain coupon bond
coupon bond -- a written document evidencing a debt obligation to which interest coupons are attached. Each coupon bears a different maturity date and states the interest due on that date. The bondholder clips the coupons from the bond as they mature and presents the coupons to the bond issuer for payment of interest.
Coupon bond -- A bond payable to bearer without registration
of the owner's name. The holder may clip the coupons
and collect the interest called for.
Coupon bonds are preferred for speculative dealings and
for temporary investment. They generally sell fractionally
higher than registered bonds for the reason that they are more
marketable and because a change in ownership requires no
formal transfer but merely the delivery and receipt of the
Sometimes registered coupon bonds are issued. These
are bonds the principal of which is payable only to those
whose names are inscribed on them as owners and whose
names also are registered (entered on the books of the company
issuing them), but the coupons calling for the payment
of the interest as it becomes due are payable to bearer.
Sometimes, also, coupon bonds are issued which are convertible
into (exchangeable for) registered bonds both principal
and interest on which are payable to the registered
owner. Payment of interest on registered bonds (not registered coupon bonds) is by check sent to the addresses of the
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Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".
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