COUPON YIELD Meaning and
Definition
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Coupon yield is a financial term that describes the interest rate paid by a fixed income security, such as a bond or a debenture, as a percentage of its face value. It is the annual interest payment made by the issuer to the bondholder, expressed as a percentage of the bond's par value or face value.
The coupon yield represents the fixed periodic payments made by the issuer to the bondholder until the maturity of the bond. It is usually paid semi-annually or annually, although the frequency may vary depending on the terms of the bond issuance.
The coupon yield is a crucial component in calculating the total return on a fixed income security. It is a reflection of the risk associated with the security as well as the prevailing interest rates in the market. Higher coupon yields typically indicate higher risk securities and vice versa.
Investors often look at coupon yields when making investment decisions, as higher rates can provide higher cash flows and potentially higher returns. Additionally, the coupon yield helps investors compare different bonds or fixed income securities and evaluate their relative attractiveness based on the income generated.
In summary, coupon yield is the interest rate paid to bondholders as a percentage of the bond's face value and plays a vital role in analyzing the potential return on investment for fixed income securities.
Common Misspellings for COUPON YIELD
- xoupon yield
- voupon yield
- foupon yield
- doupon yield
- ciupon yield
- ckupon yield
- clupon yield
- cpupon yield
- c0upon yield
- c9upon yield
- coypon yield
- cohpon yield
- cojpon yield
- coipon yield
- co8pon yield
- co7pon yield
- couoon yield
- coulon yield
- cou0on yield
- coupin yield
Etymology of COUPON YIELD
The word "coupon" in the context of finance originated from an older meaning of the word, which referred to a detachable portion of a bond or certificate. The term "coupon" comes from the French word "couper", meaning "to cut".
The word "yield" in finance refers to the rate of return or profit earned on an investment.
When combined, "coupon yield" refers to the interest or annual income received from a fixed-income security, such as a bond, which is represented by the detachable coupon. Thus, the etymology of "coupon yield" stems from the separate origins of "coupon" and "yield" in the financial domain.
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