Question

A bond's annual coupon is ____________. a. the coupon rate times the bond's value. b. the required rate times the bond's value. c. the coupon rate times the par value. d. the required rate times the par valu

Answer 1

The correct answer is letter "C": the coupon rate times the par value.

Step-by-step explanation:

Bond coupons represent the interest rate on the bond times its par value. Typically, the coupon is paid on a semi-annual basis. To determine the interest rate of the coupon, add all coupon payments for a given year and divide that amount by the face value. Coupons used to be printed on paper but they are mostly electronic nowadays.