QUICK DEFINITION
Coupon is the contractual interest payment made by a bond issuer, usually expressed as a percentage of face value.
WHY IT MATTERS
Why Coupon matters in bond markets
Coupon size affects cash flow, duration, reinvestment needs and the relationship between price and yield.
MARKET CONTEXT
How to think about it
Bond investors use coupon as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Coupon important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Coupon size affects cash flow, duration, reinvestment needs and the relationship between price and yield.