A coupon that is associated with a memory (memory coupon), allowing the holder, once the instrument or product is redeemed (on redemption), to receive a payment equal to the sum of all previous coupons. Incremental coupons are commonplace in products such as autocallables.
In a different context, an incremental coupon may refer to a coupon of a debt instrument (e.g., a floating rate bond) that has an add-on feature (such as a cap rate) for which the issuer an in attempt to compensate the holder increases the coupon size to reflect the cap value. In other words, the add-on value (cap value) is converted to a coupon increment by adjusting the coupon rate.
