Asked by Jesse Francis on Jul 30, 2024
Verified
The annual coupon of a bond divided by its face value is called the bond's:
A) Coupon.
B) Face value.
C) Maturity.
D) Yield to maturity.
E) Coupon rate.
Coupon Rate
The annual rate of interest specified on a bond, expressed as a percentage of its face value.
Annual Coupon
The yearly interest payment paid to bondholders, typically expressed as a percentage of the bond's face value.
Face Value
The nominal or initial value stated on financial instruments like bonds or stock certificates, not necessarily equal to the market value.
- Master the association between the face value of a bond, its market value, and the progression towards maturity.
Verified Answer
SW
Shadonna WoodardJul 30, 2024
Final Answer :
E
Explanation :
The coupon rate of a bond is calculated by dividing the bond's annual coupon payment by its face value.
Learning Objectives
- Master the association between the face value of a bond, its market value, and the progression towards maturity.