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In finance, a coupon is the interest payment received by a bondholder from the date of issuance until the date of maturity of a bond . Coupons are normally described in terms of the "coupon rate", which is calculated by adding the sum of coupons paid per year and dividing it by the bond's face value. For example, if a bond has a face value of ...
Accrued interest. In finance, accrued interest is the interest on a bond or loan that has accumulated since the principal investment, or since the previous coupon payment if there has been one already. For a type of obligation such as a bond, interest is calculated and paid at set intervals (for instance annually or semi-annually).
The coupon rate (or nominal rate) on a fixed income security is the interest that the issuer agrees to pay to the security holder each year, expressed as a percentage of the security's principal amount . The current yield is the ratio of the annual interest (coupon) payment and the bond's market price.
Perpetual subordinated debt is not "straight debt", rather it is close to, or in some cases identical to, preferred shares, paying a fixed-rate coupon similar to preferred shares' fixed-rate dividend. Perpetual debt comes in two types: cumulative and noncumulative. Interest on cumulative perpetual debt accrues if payments are missed.
Arrears. In finance, arrears (or arrearage) is a legal term for the part of a debt that is overdue after missing one or more required payments. [1] The amount of the arrears is the amount accrued from the date on which the first missed payment was due. The term is usually used in relation with periodically-recurring payments such as rent, bills ...
A perpetuity is an annuity in which the periodic payments begin on a fixed date and continue indefinitely. It is sometimes referred to as a perpetual annuity. Fixed coupon payments on permanently invested (irredeemable) sums of money are prime examples of perpetuities. Scholarships paid perpetually from an endowment fit the definition of ...
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the principal amount on maturity. Fixed-income securities (more commonly known as bonds) can be contrasted ...
Original Issue Discount ( OID) is a type of interest that is not payable as it accrues. OID is normally created when a debt, usually a bond, is issued at a discount. In effect, selling a bond at a discount converts stated principal into a return on investment, or interest. The accurate determination of principal and interest is necessary in ...