A fixed income instrument such as a bond, bill or note pays a predetermined amount of cash at regular intervals.

This amount - a percentage of par, or the face value of the instrument, is determined by two factors : the payment frequency, and the coupon.

The coupon is expressed in percentage form, e.g., 6%, 8%, etc. The amount received by the investor is called the coupon payment.

Payment frequency is typically defined according to the instrument itself - US Government bonds, for example, pay twice a year or semi-annually. Other bonds, for example Municipals or Corporates may pay only once a year.

In the example above, the owner of a 6% US Government bond would receive a $30 twice a year.

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