coupon

noun

cou·pon | \ ˈkü-ˌpän

Definition of coupon

1 : a statement of due interest to be cut from a bearer bond when payable and presented for payment also : the interest rate of a coupon

2 : a small piece of paper that allows one to get a service or product for free or at a lower price: such as

a : one of a series of attached tickets or certificates often to be detached and presented as needed

b : a ticket or form authorizing purchases of rationed commodities

c : a certificate or similar evidence of a purchase redeemable in premiums

d : a part of a printed advertisement to be cut off to use as an order blank or inquiry form or to obtain a discount on merchandise or services

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Examples of coupon in a Sentence

Bring in this coupon for a free oil change. I'm always clipping coupons from the newspaper to use at the grocery store. The coupon is good for one free ice-cream cone. Send in this coupon for more information.

Recent Examples on the Web

September is National Senior Center Month and the center is offering a coupon for an extra 10 minutes free for every massage booked during the month of September. — courant.com, "Community News For The Windsor Edition," 11 Sep. 2019 Donations will be good for a coupon for a Shareable item (Potstickers, Korean BBQ Meatballs or Cheesy Garlic Bread) on the customer’s next visit to the fast casual restaurant. — Trevor Fraser, orlandosentinel.com, "Noodles & Company invites guests to share a donation for a Shareable," 27 Aug. 2019 All new customers who sign up with get a coupon for $5 off a $25 purchase, Clark said. — Robin Goist, cleveland.com, "Mustard Seed Market launches customer loyalty program," 12 Aug. 2019 The first 75 ticket holders will get a coupon for a free taco at nearby Parklife. — Max Falkowitz, New York Times, "Camping on Staten Island, an Outdoor Adventure Without Leaving N.Y.C.," 17 July 2019 With the Pilot Flying J app Wednesday, get a coupon for a free hot dog or roller grill item. — Kelly Tyko, USA TODAY, "National Hot Dog Day 2019: Where to get free hot dogs and deals Wednesday," 16 July 2019 Plus, new members get a coupon for $5 off a $10 purchase. — Laura Daily And Bryan K. Chavez, The Know, "16 free and cheap things to do around Denver in July," 1 July 2019 Admission is $5, but guests will get $3 coupons for food truck purchases. — Brian Mccollum, Detroit Free Press, "River Days 2019: Five things to know, including fest's new location, Smokey details," 20 June 2019 His mother ran a government office that handled gasoline-rationing coupons for a three-county area during World War II. — BostonGlobe.com, "OKLAHOMA CITY — T. Boone Pickens, a brash and quotable oil tycoon who grew even wealthier through corporate takeover attempts, died Wednesday. He was 91.," 12 Sep. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'coupon.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Dictionary Entries near coupon

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Last Updated

21 Oct 2019

Look-up Popularity

Time Traveler for coupon

The first known use of coupon was in 1822

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More Definitions for coupon

coupon

noun

Financial Definition of coupon

What It Is

In the finance world, a coupon is the annual interest paid on the face value of a bond. It is expressed as a percentage.

How It Works

The term "coupon" comes from the small detachable coupons attached to bearer bond certificates. The coupons entitled the holder to interest payments from the borrower. Coupons are rare today because most bonds are not issued in certificate form; rather, they are registered electronically (although some bondholders still choose to hold paper certificates).

Let's assume you purchase a $1,000 XYZ Company bond. The coupon rate on the bond is 5%, which means the issuer will pay you 5% interest per year, or $50, on the face value of the bond ($1,000 x 0.05). Even if your bond trades for less than $1,000 (or more than $1,000), the issuer is still responsible for paying the coupon based on the face value of the bond.

American and Japanese issuers typically make coupon payments every six months. So, in the example above, XYZ Company would pay you $25 twice a year. European issuers generally make coupon payments once per year.

Not all coupon rates stay the same over the life of a bond. Some issuers may pay interest based on a stated margin over a financial index such as the London Interbank Offered Rate (LIBOR). These floating-rate bonds typically reset their coupon rates every six months.

Not all bonds have a coupon, as is the case with zero-coupon bonds. Instead of making interest payments, companies may issue bonds at deep discounts and then pay the holder the full face value of the bond upon maturity. For example, instead of purchasing that XYZ Company bond for $1,000 and then collecting 5% interest each year, you could purchase a XYZ Company zero-coupon bond for $750, hold the bond until maturity, and receive $1,000 in return (for interest of $250). In both cases, the investor receives interest, but the zero-coupon bond investor does not receive interest until the bond matures. Note that zero-coupon issuers do not have to allocate cash to debt service (i.e., make interest payments) until their bonds mature.

Companies involved in leveraged buyouts or other transactions that result in a high level of interest burden may issue deferred-coupon bonds, whereby the issuer can avoid making far payments for a specified amount of time.

Why It Matters

Coupons are one of the defining characteristics of bonds and one of the most influential on their pricing because they give investors a way to compare bonds. For instance, the 5% coupon on the XYZ Company bond may make the bond an attractive investment if similar investments are only paying 2%. Likewise, the XYZ Company bond may not be attractive if similar investments pay 10%.

With higher interest rates, a better yield can be found other places than with bonds. This is why bond prices usually fall when interest rates increase and rise when interest rates fall. Notably, the size of a bond's coupon tends to indicate how sensitive the bond's price will be to interest rate changes. In general, the higher the coupon rate, the less the price will change when interest rates fluctuate.

Source: Investing Answers

coupon

noun

English Language Learners Definition of coupon

: a usually small piece of printed paper that lets you get a service or product for free or at a lower price

chiefly British : a section of an advertisement that you can cut out and mail to a company in order to request information or to order a product or service

See the full definition for coupon in the English Language Learners Dictionary

coupon

noun

cou·pon | \ ˈkü-ˌpän

, ˈkyü-\

Kids Definition of coupon

1 : a ticket or form that allows the holder to receive some service, payment, or discount

2 : a part of an advertisement meant to be cut out for use as an order blank

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coupon

noun

cou·pon | \ ˈkü-ˌpän, ˈkyü-

Legal Definition of coupon

: a statement of due interest to be cut from a debt instrument and especially a bearer bond when payable and presented for payment also : the interest rate of a coupon