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In finance, a coupon is the interest payment received by a bondholder from the date of issuance until the date of maturity of a bond. [1] Coupons are normally described in terms of the "coupon rate", which is calculated by adding the sum of coupons paid per year and dividing it by the bond's face value. [2]
Let time T be the number of draws needed to collect all n coupons, and let t i be the time to collect the i-th coupon after i − 1 coupons have been collected. Then T = t 1 + ⋯ + t n {\displaystyle T=t_{1}+\cdots +t_{n}} .