Coupon vs Interest rate

[Brook2]

Isn't calling an interest rate a "coupon" similar to calling a computer a "typewriter"?

Why doesn't the financial industry update the language with the times, since physical coupons are not used anymore?

Just Nostalgia? To confuse people?

[pb4uski]

Slow day in the Brook2 household?

For secondary purchases the coupon helps distinguish the interest vs the YTM that includes the coupon and accrual of discount less amortization of premium.

[Montecfo]

Well most people would I hope be more precise.

Coupon, or coupon rate in reference to a bond's typically fixed recurring payout, expressed as an annual rate.

Yield
Yield to maturity
Yield to call

These are different concepts not to be confused, that comprise all returns from a security including the coupon and amortization of discount or premium to a stated point.

[copyright1997reloaded]

Quote:

Originally Posted by Brook2 Isn't calling an interest rate a "coupon" similar to calling a computer a "typewriter"? Why doesn't the financial industry update the language with the times, since physical coupons are not used anymore? Just Nostalgia? To confuse people?

Do you type on a computer? Same for a typewriter, you typed on it.

Just because the mechanism can be different, e.g. touch typing on an iPad vs. mechanical keys on an IBM Selectric doesn't fundamentally change what has occurred.

As an aside, I wish there still were bearer bonds.

[rodi]

My son, the business major, can go on for hours about coupon rate, vs APY, vs, whatever. My eyes glaze over. He then rhapsodizes about how great his business finance prof was. Kid has a serious man crush on Larry Gorman.