Coupon

Interest. Derives from the traditional means of paying interest on a definitive, security-printed bearer bond, wherein each interest payment was represented by a detachable perforated strip on the side of the bond - you know, like coupons in the newspaper - which the bondholder would tear off and present to the paying agent in return for the interest payment in question.

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Hence the fabled journey each year of the Belgian dentist in which he would set out in his Citroen 2CV with only his favourite pork-pie hat, a brown suit and a battered suitcase full of coupons, cross the border to Luxembourg, present his coupons to the Luxembourg paying agent and promptly depart on a two-week bacchanalian bender in the Balearic before returning to his maxillofacial practice in Brussels' red-light district on the first day of September.

Coupon can refer to any interest payment, under loans, swaps etc, or specifically to the interest payment obligation under a bond as a discrete financial instrument from its host bond. Each coupon, once detached, is its own transferable promissory note , it can trade in the same way as the bond from which it was detached trades. This is called coupon stripping.