Coupon
The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually.
This is also referred to as the "coupon rate" or "coupon percent rate". Investopedia Says:
For example, a $1,000 bond with a coupon of 7% will pay $70 a year.
It is called a "coupon" because some bonds literally have coupons attached to them. Holders receive interest by stripping off the coupons and redeeming them. This is less common today as more records are kept electronically. Related Terms:
Coupon Bond
Coupon Pass
Interest Only (IO) Strips
Interest Rate
Premium
Rate Trigger
Roll-Down Return
Weighted Average Coupon - WAC
Zero-Coupon Bond Conditional Prepayment Rate (CPR)
A loan prepayment rate that is equal to the proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period. The calculation of this estimate is based on a number of factors such as historical prepayment rates for previous loans that are similar to ones in the pool and on future economic outlooks. Investopedia Says:
The CPR can be used for a variety of loans. For example, mortgages, student loans and pass-through securities all use CPR as estimates of prepayment.
Typically, CPR is expressed as a percentage. For example, a pool of mortgages with a CPR of 8% would indicate that for each period, 8% of the pool's remaining principal outstanding will be paid off. Related Terms:
Dealer-Median Prepayment Speed
Loan
Mortgage
Mortgage-Backed Securities - MBS
Pass-Through Security
Prepayment
Prepayment Risk
Principal
Public Securities Association Standard Prepayment Model - PSA
Refinancing Risk |