Question

What does doubling the coupon of a bond do to its yield? Select the best answer from the choices provided.

a. It halves the yield.
b. It doubles the yield.
c. It quadruples the yield.
d. It depletes the yield.

Answer 1

It doubles the yield

Answer 2

b. It doubles the yield.

Explanation:

Doubling the coupon of a bond doubles the yield.

The doubling option is a provision where the bond issuer has the right to redeem twice the amount of debt when, repurchasing bonds.

Therefore, the answer will be : b. It doubles the yield.