A coupon payment is
A)the payment of principal that is the 'coupon' of the total payments.
B)the amount of interest expense reported on the income statement.
C)calculated by multiplying the book value of the bonds times the effective rate of interest.
D)the amount paid to bondholders on each interest payment date.

Question

Quizplus · Accepted Answer

A coupon payment is the amount paid to bondholders on each interest payment date. It represents the interest expense that the issuer of the bond pays to the holder of the bond as a percentage of the face value of the bond. The coupon rate is usually fixed at issuance, but the actual amount of the coupon payment depends on the face value of the bond and the prevailing interest rate in the market.

A Coupon Payment Is