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DEFINITION of 'Current Coupon Bond'

A bond with a coupon rate that is within 0.5\% of the current market rate. Current coupon bonds are typically less volatile than other bonds with lower coupons because the coupon rate is closer to that set by the market.

BREAKING DOWN 'Current Coupon Bond'

Because a current coupon bond is less volatile, it is also less likely to be called. It has implied call protection rather than an explicit call provision. Its inherent stability, however, also means that it won't offer as great of a return.

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RELATED FAQS
  1. How does a bond's coupon rate affect its price?

    Find out how a bond's coupon rate influences its price, including the role of government-dictated interest rates and the ... Read Answer >>
  2. How does a bond's coupon interest rate affect its price?

    Find out why the difference between the coupon interest rate on a bond and prevailing market interest rates has a large impact ... Read Answer >>
  3. How do debit spreads impact the trading of options?

    Find out what it means when a bond has a coupon rate of zero and how a bond's coupon rate and par value affect its selling ... Read Answer >>
  4. What is the most common solvency ratios used in fundamental analysis?

    Learn about the difference between a bond's coupon rate and its yield rate, how the coupon rate influences market price and ... Read Answer >>
  5. Why do bond coupon rates vary so greatly?

    Learn about the two major reasons that cause bond coupon rates to vary so dramatically and what role coupons play in the ... Read Answer >>
  6. How does the money from the interest on my bond get to me?

    When you buy a regular coupon bond, you are entitled to a coupon, which is typically paid at regular intervals, and the face ... Read Answer >>
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