The coupon is an important component of securities such as bonds and shares.
It represents an interest or dividend coupon that gives the holder the right to draw the income due or exercise other rights. In the case of bonds, the coupon is called an income coupon because it represents the investor's interest income. The coupon is usually expressed as a percentage of the nominal amount of the security and thus represents the interest rate at which the issuer of the security is willing to use the investors' capital.
A coupon can also be used as a subscription right, entitling the holder to purchase additional securities at a specified price. Subscription rights are often issued in connection with capital increases by companies to allow shareholders to purchase additional shares and thus increase their investment exposure.
In a broader sense, the nominal interest rate of a bond is also called the coupon, as it reflects the interest rate at which the issuer makes the capital available to investors. The amount of the coupon depends on various factors, such as the creditworthiness of the issuer, the maturity of the security and current market interest rates.
