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Glossary

Coupon Bond

Category — Bond Types
Coupon Bond means a debt obligation that provides for the payment of a periodic coupon. The coupon can be paid monthly, quarterly, semi-annually or annually depending on the debt security and the choice of the issuer. Coupon Bond subscribers will receive Coupon payment from the first payment date until maturity.

Coupon Bonds are denominated to the "bearer" as they are not nominative: the buyer’s name is not marked in any type of certificate. Thus, anyone who provides the necessary coupons to the issuer can receive interest payments regardless of whether that person is the actual owner of the bond. For this reason, coupon bonds present many opportunities for tax evasion and other fraudulent acts. The Coupon is nothing more than the payment of the interest recognized to the subscribers in order to repay the initial investment made by them. It can vary not only in frequency but also in the interest rate. Normally a coupon bond with a high rate is certainly more attractive for an investor, but at the same time it will have a higher margin of uncertainty.

For example, the issue of 21st Century Fox America provides for a half-yearly coupon of 7.7% per annum. Therefore, the annual coupon rate will be 7.7% and the coupon will be paid every six months.
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