A bond that pays interest on surrender of the coupons, clipped from its certificate. The holder of a coupon-paying bond receives periodic payment (semiannually, annually, etc) during the life of the bond. For example, bonds issued in Europe have coupon payments once per annum, while those issued in the United States have typically semi-annual payments (half of the coupon is paid twice a year). That means, for a 6% coupon-paying bond which has a $1,000 face value, $60 will the coupon payment of a European coupon bond, whereas in the United States, $30 will be paid every six months. A coupon-paying bond can be viewed as a series of zero-coupon bonds (zeros), each maturing on a different maturity date (of course, the last one consists of coupon plus principal redemption).
This bond is also known as a coupon bond or a coupon-bearing bond.
