What is a coupon payment?

Definition: A coupon payment is the annual interest payment paid to a bondholder by the bond issuer until the debt instrument matures. In other words, there payments are the periodic payments of interest to the bondholders. What Does Coupon Payment Mean? What is the definition of coupon payment?

How do bond coupon payments work?

When a bond is first issued, the bond's price is its face value. The bond issuer pays a bondholder a percentage of the face value every year. This percentage is also referred to as the coupon rate or nominal yield. Consequently, the coupon rate determines the total amount paid as coupon payments in a year. How to calculate bond coupon payment?

What is a variable coupon payment?

In variable coupon payments, the coupon rate varies directly or indirectly with another variable. A change in coupon rate means a change in coupon payment. For example, a bond may have coupon rate equal to LIBOR + 3%. Since LIBOR is variable, the coupon rate and coupon payments are variable too for this bond.

How do you calculate a coupon payment for a period?

Coupon payment for a period can be calculated using the following formula: Where F is the face value of the bond, c is the annual coupon rate and n represents the number of payments per year. Walmart Stores Inc. has 3 million, $1,000 par value bonds payable due on 15th August 2037.