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.
historic definition...
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 certificate. 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 registered owners.
Sarah Chen is a Certified Financial Analyst (CFA) and Certified Financial Planner (CFP) with over 15 years of experience in wealth management, retirement planning, and investment strategy. She holds an MBA in Finance from Wharton School of Business and has helped thousands of clients achieve their financial goals. Sarah is passionate about financial education and believes that everyone deserves access to clear, actionable financial guidance.