1---
 2meta: 
 3  date: false
 4  reading_time: false
 5title: "Coupon"
 6date: 2023-10-05
 7description: "A term used in finance referring to the dividends due on a security, notably for bearer securities where payments are claimed using a physical coupon."
 8tags: ["financial instruments", "securities", "dividends"]
 9---
10
11## Background
12
13Coupons originated in the early days of modern finance when bonds and other bearer securities came with attached coupons. These facilitated the collection of periodic interest payments.
14
15## Historical Context
16
17The concept of the coupon dates back to the 19th century, a time when bearer bonds were commonplace in financing government and corporate debt. Bearer bonds used physical coupons that bondholders clipped and presented to claim interest payments.
18
19## Definitions and Concepts
20
211. **Coupon**: Dividends or interest payments due on a security. For bearer securities, these payments are claimed through physical coupons attached to the documents of title.
22
23## Major Analytical Frameworks
24
25### Classical Economics
26In classical economic theory, interest rates are fundamentally tied to capital accumulation concepts, and coupons serve as the tangible means of reflecting these returns.
27
28### Neoclassical Economics
29Neoclassical frameworks emphasize the present-value model, where a security's coupon payments are discounted to determine the bond's current value.
30
31### Keynesian Economic
32Keynesian approaches might examine how expectations of future coupon payments influence consumer consumption and investment behaviors.
33
34### Marxian Economics
35Marxian economics would contextualize coupons within the broader capitalist system, critiquing the nature of returns on financial capital as a feature of capital accumulation and speculation.
36
37### Institutional Economics
38Institutional economists would focus on the regulatory and structural mechanisms governing coupon issuance and redemption.
39
40### Behavioral Economics
41Here, interest may lie in how investors perceive the value of future coupons, potentially mispricing securities based on cognitive biases.
42
43### Post-Keynesian Economics
44Post-Keynesians might explore how changes in monetary policy and macroeconomic environments impact the real value of coupon payments.
45
46### Austrian Economics
47Austrians could argue from a time-preference perspective, where coupons represent an investor’s temporal valuation of future income streams.
48
49### Development Economics
50In development economics, the focus might be on how coupon mechanisms can be used in emerging markets to attract investment.
51
52### Monetarism
53From a monetarist perspective, the emphasis would be on the relationship between coupon rates and inflation, and their role in monetary policy.
54
55## Comparative Analysis
56
57Analyzing coupon-bearing securities across different economics can show how theories prioritize factors like risk, temporal preferences, governmental policies, and investor behavior in determining the security's yields and prices.
58
59## Case Studies
60
611. **The U.S. Treasury Bonds**: How coupons played a role in post-World War II economic scenarios.
622. **European Bonds in the 20th Century**: Their role in financing recovery after world conflicts.
633. **Japan Government Bonds**: How coupon structures affected their economic stagnation period.
64
65## Suggested Books for Further Studies
66
67- "The Bond Book" by Annette Thau
68- "Investing in Bonds For Dummies" by Russell Wild
69- "The Handbook of Fixed Income Securities" edited by Frank J. Fabozzi
70
71## Related Terms with Definitions
72
73- **Bearer Bond**: A bond not registered in the owner's name, requiring possession of the bond’s certificate to claim interest payments.
74- **Interest Rate**: The percentage charged on borrowed money, or the returned percentage for investment.
75- **Yield**: The income return on an investment, such as the interest or dividends received.
76- **Present Value**: The current worth of a future sum of money, given a specific rate of return.