Bonds. The basic language

Interest (the coupon)

A simple bond pays a periodic interest rate. This is sometimes called the "coupon".

If the coupon is 5% per year then you will receive 5% once every year on the interest payment date.

If it is a semi-annual pay bond, then you would receive 2.5% twice per year on the interest payment dates.

Face value of the bond

Each bond has a face value. This is the amount the bond issuer will pay back on the maturity date.

You might buy the bond when it is first sold for £100 or you might pay more or less for it. Whatever you pay for it, on the maturity date you will receive the face value.

Maturity

Simple bonds have a maturity date.

This is the date on which the bond issuer must pay you back the face value of the bond.