Term: Coupon

The yield often in cash paid annually to the holder of a security. Many credit investment vehicles include coupons meaning investors receive a specified cash flow – often viewed as an appealing benefit of such securities. Securities that pay coupons tend to be viewed as having lower risk and therefore limited upside. A security backed by a toll road might pay a coupon. An early stage biotech startup would never pay a coupon. As in: We structured this deal to include a nice equity upside together with a coupon.

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