PRIME RATE Definition

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PRIME RATE is the interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates; mortgage interest rates for example.

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COUPON is: 1) The annual interest rate on a fixed income security, set at the time it was issued, at which that instru­ment will accrue and pay interest. 2) Small pieces of paper attached to nonregistered interest-bearing instru­ments that reflect the semiannual amounts of interest to be paid. These coupons are cut out and tendered on the appropriate coupon dates, and the interest is then paid.

401 (K) PLAN is a retirement plan in the United States that allows qualified employees to contribute money from their paychecks into a tax-sheltered account.

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