Compare for example a bond paying 6 percent biannually (that is, coupons of 3 percent twice a year) with a certificate of deposit (GIC) which pays 6 percent interest once a year. The total interest payment is $6 per $100 par value in both cases, but the holder of the biannual bond receives half the $6 per year after only 6 months (time preference), and so has the opportunity to reinvest the first $3 coupon payment after the first 6 months, and earn additional interest.