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Coupon Definition

Understanding Coupons For example, a $1,000 bond with a coupon of 7% pays $70 a year. Typically these interest payments will be semiannual, meaning the investor will receive $35 twice a year.

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The Pros & Cons Of Using Coupons For Your Business

In today’s world, 96% of consumers have used a coupon in the past 90 days. JC Penney tried to break consumers of the coupon habit in 2012 and quickly saw a 23% drop in sales for the first three

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Why Do Companies Print Coupons

For example, an Albertsons' grocery store promotion gave customers a coupon for $10 off their next visit when they purchased $100 in qualifying gift cards.

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Coupon Rate

The coupon rate is the interest rate paid on a bond by its issuer for the term of the security. The term "coupon" is derived from the historical use of actual coupons for periodic interest payment

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Zero-Coupon Bond

If an investor wishes to make a 6% return on a bond, with $25,000 par value, that's due to mature in three years, he will be willing to pay the following: $25,000 / (1 + 0.06) 3 = $20,991. If the

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Promotion Expense Definition

Companies cannot write-off the actual market value of the goods or services given away. Instead, it's the cost of the promotion that must be written off.

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Discount Rate Definition

Discount Rate: The discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

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Voucher

A voucher is a document recording a liability or allowing for the payment of a liability, or debt, held by the person or company who will receive payment.

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Interest-Only Retirement: Can It Be Done

The Hidden Problem: Inflation . Over the past two decades, inflation has ranged from 0.1% to as much as 3.8% per year.   In our original scenario—the retiree with …

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Voucher Check Definition

Voucher Check: A two-part combination of a check and voucher. Also known as a remittance advice, the voucher details the reason for the payment by the issuer of the check. The recipient of the

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Strip Bonds Definition

Strip Bond: A strip bond is a bond where both the principal and regular coupon payments--which have been removed--are sold separately. Also known as a "zero-coupon bond."

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Coupon Bond

If an investor purchases a $1,000 ABC Company coupon bond and the coupon rate is 5%, the issuer provides the investor with a 5% interest every year. This means the investor gets $50, the face

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Current Coupon Definition

Understanding Current Coupon. A current coupon bond is one that is selling at a price at or close to its par value. In particular, the bond must have a coupon rate that falls within 0.5% above or

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Coupon Stripping

Coupon stripping is the separation of a straight bond's periodic interest payments from its principal repayment obligation to create a series of individual securities. In coupon stripping, the

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Ex-Coupon Definition

Ex Coupon: A bond or preferred stock that does not include the interest payment or dividend when purchased or sold. A bond that is ex coupon is sold or …

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Original Issue Discount – OID Definition

An original issue discount (OID) is the amount of discount or the difference between the original face value and the price paid for the bond.

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What is a stripped bond

It decides the best way to do this is to issue bonds, which are sold with a face value of $1,000, a coupon payment of 5% paid annually, and matures in five years. Ben's Investment Co. is in the

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Off-Chain Transactions (Cryptocurrency)

Another method for off-chain transactions is to use a coupon-based payment mechanism. A participant purchases coupons in exchange for the crypto-tokens and gives the code to …

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4 Basic Things to Know About Bonds

It measures what the return on a bond is if it is held to maturity and all coupons are reinvested at the YTM rate. Because it is unlikely that coupons will be reinvested at the same rate, an

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Bond Yield Rate vs. Coupon Rate: What's the Difference

Coupon Pass: The purchase of treasury notes or bonds from dealers, by the Federal Reserve.

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Treasury STRIPS Definition

Assuming it originally pays coupons semi-annually, 21 zero-coupon bonds can be created, including 20 semi-annual coupon payments and the bond itself. Each stripped coupon has a $1,000 face value

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Bond Valuation Definition

Following our example above, if the bond paid no coupons to investors, its value will simply be: $1000 / (1.03) 4 = $888.49 Under both calculations, a coupon-paying bond is more valuable than a

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Debt Tender Offer Definition

On Oct. 6, 2016, Walmart Inc. ( WMT) initiated a cash debt tender offer to purchase up to $8,500,000,000 of certain outstanding debt securities in an attempt to …

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Yield to Maturity vs. Coupon Rate: What's the Difference

The yield to maturity (YTM) is the percentage rate of return for a bond assuming that the investor holds the asset until its maturity date. It is the sum of all of its remaining coupon payments. A

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Discount Bond Definition

A discount bond is a bond that is issued, or trades in the market for less than its par or face value. A distressed bond trading at a significant discount to par can effectively raise its yield to

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How Are Savings Bonds Taxed

Understanding How Savings Bonds are Taxed . The ownership of the bond governs who is responsible for paying tax on the interest. If one person purchases the bond and is …

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Will Corporate Debt Drag Your Stock Down

Liquidity ratios are a class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital. more.

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Why Structured Notes Might Not Be Right for You

A structured note is a debt security issued by financial institutions. Discover why structured notes might not be the best option for an investor.

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How to Live Off Your Dividends

For example, assume you bought 1,000 shares of a stock that traded for $100, for a total investment of $100,000. The stock has a 3% dividend yield, so …

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Treasury Bills (T-Bills) Definition

A Treasury Bill (T-Bill) is a short-term debt obligation issued by the U.S. Treasury and backed by the U.S. government with a maturity of less than one year.

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Advantages and Risks of Zero Coupon Treasury Bonds

Unique Advantages of Zero-Coupon U.S. Treasury Bonds . Treasury zeros zoom up in price when the Federal Reserve cuts rates, which helps …

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How Mail-In Rebates Rip You Off

How Mail-In Rebates Rip You Off. FACEBOOK TWITTER LINKEDIN By. Bobbi Dempsey. Updated Jun 25, 2019. Mail-in rebates seem like such a great …

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How Does an Investor Make Money On Bonds

Bonds are among a number of investments known as fixed-income securities.They are debt obligations, meaning that the investor loans a sum of money (the principal) to a company or a government for

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Introduction To STRIPS

An investment bank purchases $100 million of these securities and peels off the 60 semiannual interest payments of $3.5 million each. The bank …

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How to Calculate PV of a Different Bond Type With Excel

The bond provides coupons annually and pays a coupon amount of 0.025 x 1000 ÷ 2= $25 ÷ 2 = $12.50. The semiannual coupon rate is 1.25% (= 2.5% ÷ 2).

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3 signs that it's time to sell your bonds

Investing can be tricky, even when it comes to so-called "safe" investments such as bonds. When a company issues a bond, the money they receive in …

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Bond Coupon Interest Rate: How It Affects Price

The coupon rate on a bond vis-a-vis prevailing market interest rates has a large impact on how bonds are priced. If a coupon is higher than the prevailing interest rate, the bond's price rises; if

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What Defines a Discount in Finance

Discount: In finance, discount refers to the condition of the price of a bond that is lower than par, or face value. The discount equals the difference between the price paid for a security and

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Zero-Coupon Mortgage Definition

The coupon, the annual interest rate paid on the loan, is zero until the expiration date when it must all be paid back in one hit, together with the full amount borrowed. Commercial projects use

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Zero Coupon Inflation Swap Definition

A zero coupon inflation swap is a derivative where a fixed rate payment on a notional amount is exchanged for a payment at the rate of inflation.

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How can I calculate a bond's coupon rate in Excel

Most bonds have a clearly stated coupon rate, which is expressed as a percentage. However, calculating the coupon rate using Microsoft Excel is simple if all you have is the coupon payment amount

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5 Money-Saving Shopping Tips

The coupons might cost you $2.50 total, including postage, but if you use all 10 of them, your net savings on a $3 stick of deodorant will be at least $27.50 plus tax.

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How the Kohl's Credit Card Works: Benefits and Rewards

Kohl’s often offers cash-off coupons, such as $10 off purchases of $30 or more. These may be combined with other discounts, as well as Kohl’s rewards programs.

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Simple Math Terms for Fixed-Coupon Corporate Bonds

A guide to help to understand the simple math terminology behind fixed-coupon corporate bonds.

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Subordinated Debt

Subordinated Debt is a loan or security that ranks below other loans or securities with regard to claims on assets or earnings. Subordinated debt is …

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An Introduction to Convertible Bonds

Convertible bonds are corporate bonds that can be exchanged for common stock in the issuing company. Companies issue convertible bonds to …

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Taxation Rules for Bond Investors

Taxation of Zero-Coupon Bonds . Although they have no stated coupon rate, zero-coupon investors must report a pro-rated portion of interest each year, as income, even though interest hasn’t been

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How Corporate Events Impact Stock and Bond Values

2. A Company Buys Back Stocks . When a company announces a stock buyback, stockholders are generally pleased by this announcement.That is because stock buybacks reduce shares outstanding so the

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