Coupon Strategy: Reinvestment or Withdrawal?
As most equities pay dividends, the majority of fixed-income securities (excluding zero-coupon bonds etc.) pay coupons periodically to investors throughout the instrument’s life. However, fixed-income securities’ interest payments are non-discretionary compared to optional share dividends and failure to fulfil bond obligations (including paying interest) can have severe consequences including default, credit rating downgrades, trading penalties and adverse regulatory actions. This [...]