Bond features
□ Coupons = a constant payment that are paid
every year. (Interest earned)
□ Coupon interest rate = stated annual interest
rate on a bond
■ High coupon rate € many people may want to
■ Low coupon rate € not so many people want to
□ Face value or par value = the amount of money
the firms borrows and promises to repay on at the
end of the loan
□ Maturity date = a specific date on which the par
value of a bond must be repaid
Note: a corporate bond will often have a maturity of 30 years 4