Bond Maturity Payments: Final Coupon and Principal

Summary

The document clarifies the cash flow a bondholder receives at maturity. For a zero-coupon bond, there are no periodic coupon payments; the bond is typically purchased below face value and pays its face value at maturity. For other fixed-income bonds, the final payment includes both the scheduled coupon and repayment of the original principal.

This distinguishes the maturity coupon from the return of principal: the face value is not treated as the final coupon. The explanation is concise and gives no examples, bond-specific conventions, or discussion of payment timing. It addresses the usual structure described in the answer, while actual terms should be checked in the instrument documentation.

Key ideas

• A zero-coupon bond pays no periodic coupon and returns face value at maturity.
• A zero-coupon bond is described as being bought at a discount to face value.
• Other fixed-income bonds pay their scheduled coupon and return principal at maturity.
• The final coupon and repayment of face value are separate components of the maturity cash flow.

Tags

# Does a bond pay a coupon at maturity?


# Does a bond pay a coupon at maturity?












I know a bond pays an annuity cashflow of coupon payments and then at maturity it pays the face value. But, at maturity, does it pay an additional coupon payment on top of the face value or are we supposed to think about this payment of its face value as its final coupon payment?

## Answer by nsivakr (score 1)

https://quant.stackexchange.com/a/70349

Zero coupon bonds do not pay coupon. Instead zero coupon bonds pay the face value at maturity. We buy at a discount and at maturity, it pays the face value.

All other fixed income bonds, pay coupon and the original principal at the end.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.