A coupon bond involves
A)interest payments from the borrower to the lender periodically during the life of the loan and payment by the borrower to the lender of the face value of the loan at maturity.
B)interest payments from the borrower to the lender periodically during the life of the loan, but no payment by the borrower to the lender of the face value of the loan at maturity.
C)periodic payments by the borrower to the lender that include both principal and interest.
D)periodic payments by the borrower to the lender that include principal, but not interest.

Question

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A coupon bond involves interest payments from the borrower to the lender periodically during the life of the loan and payment by the borrower to the lender of the face value of the loan at maturity. Coupon bonds are also known as fixed-rate bonds because the interest rate is fixed at the time of issuance and does not change over the life of the bond. The interest payments are typically made semi-annually or annually, and the face value of the bond is the amount that the borrower agrees to repay the lender at the end of the bond term.

A Coupon Bond Involves