ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with coupons attached that represent semiannual interest payments.

Detailed explanation-2: -Bonds can have fixed or floating rate coupon bonds.

Detailed explanation-3: -A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a year divided by the face value of the bond in question).

Detailed explanation-4: -For example, you might pay $3, 500 to purchase a 20-year zero coupon bond with a face value of $10, 000. After 20 years, the issuer of the bond pays you $10, 000. For this reason, zero coupon bonds are often purchased to meet a future expense such as college costs or an anticipated expenditure in retirement.

Detailed explanation-5: -A zero-coupon bond, also known as an accrual bond, is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value.