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

They were accused of failing to record sales of coupon books sold at the bingo hall and pocketing the revenue instead, exploiting what is described in charging documents as a lax record-keeping system. — Sarah Horner, Twin Cities, "Former employee sentenced for stealing from Roseville Bingo Hall tells judge she’s a ‘giver not a taker’," 11 June 2019 The Flamingo sometimes offers a coupon code for a free buffet for hotel guests. — Melissa Yeager, azcentral, "Best Las Vegas buffets: 22 all-you-can-eat restaurants on the Strip," 7 June 2019 Today's list is highlighted by a number of deals on Lenovo's ThinkPad notebooks, which the PC maker has once again discounted on its online store with various coupon codes. — Ars Staff, Ars Technica, "Dealmaster: A handful of Lenovo ThinkPad laptops are discounted today," 29 May 2019 Alberto Gallo of Algebris, an investment firm, estimates that yields would have to be at least 4-4.5% for several months before higher coupon payments would make debt unsupportable. — The Economist, "Italy’s political crisis is roiling financial markets once more," 31 May 2018 There's no minimum on the coupon, but don't hold back, either because the beloved brand is offering a complimentary three-piece gift on purchases of $125 or more. — Alexis Rhiannon, Allure, "The Kiehl's Friends and Family Sale Is Happening Now," 23 Apr. 2019 The coupons can only be used for a specific product. — Michelle Hunter, NOLA.com, "Walgreens employees bought more than $26,000 in gift cards with fake coupons: JPSO," 10 Apr. 2018 On Friday, a Chicago woman tried to use a coupon at CVS when a store employee told her the slip was fake and another worker called the police. — Rachel Siegel, The Seattle Times, "Chicago CVS employees call 911 on black woman trying to use a coupon," 16 July 2018 In 2016, 20 percent of prescriptions for brand-name drugs used a drug copay assistance coupon, according to an analysis by researchers at the USC Schaeffer Center for Health Policy and Economics. — Special To The Oregonian, OregonLive.com, "Prescription drug copay help: 2018 changes leave patients paying more," 4 June 2018

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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Last Updated

17 Jun 2019

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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