A paper entitling you to 10 percent off of a meal in a restaurant is an example of a coupon. The part of a savings bond that you can detach and use to redeem interest payments is an example of a coupon. The interest payment that must be made on a note or bond until it matures.

How do you get a coupon payment?

1. Divide the annual coupon rate by the number of payments per year. For instance, if the bond pays semiannually, divide the coupon rate by 2.
2. Multiply the result with the bond’s face value to get the coupon payment.

Is a high coupon rate good?

Thus, bonds with higher coupon rates provide a margin of safety against rising market interest rates. If the market rate turns lower than a bond’s coupon rate, holding the bond is advantageous, as other investors may want to pay more than the face value for the bond’s comparably higher coupon rate.