Features of a Bond


A bond is made up of few main components: principal/face value, the coupon rate and maturity date

Principal amount

The amount that the investors lend to the bond issuer.

Coupon Rate

The coupon is the amount the bondholder will receive as interest payments. Most bonds pay out interest every six months, but it’s also possible for the interest pay out to be set as monthly, quarterly or annually. The coupon is expressed as a percentage of the principal/face value. If a bond pays a coupon of 5% and its principal/face value is $1,000, the interest pay-out will be $50 per year.

Maturity Date

The maturity date is the date on which the investors will get back the Principal Amount.