Coupon

This Issue in United States

Concept of Coupon (Coupon Rate) in Futures Trading

In this context of financial law, the following is a definition of Coupon (Coupon Rate): A fixed dollar amount of interest payable per annum, stated as a percentage of principal value, usually payable in semiannual installments.

Coupon

Concept of Coupon in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): The nominal annual rate of interest paid on a financial instrument and expressed as a percentage of the principal value or as a floating rate based on a reference rate such as LIBOR.

The interest is paid to the holder of the security by the borrower. The coupon is generally paid annually, semi-annually or, in some cases, quarterly depending on the type of instrument.

Resources

See Also

• Derivatives Contract