D&G Enterprises issues bonds with a $1,000 face value that make coupon payments of $30 every three months. What is the coupon rate?

Question

Quizplus · Accepted Answer

The coupon rate is calculated on an annual basis. Since the bond makes quarterly payments of $30, the total annual payment is $30 x 4 = $120. To find the coupon rate, divide the annual payment by the face value of the bond: $120 / $1,000 = 0.12 or 12%.

D&G Enterprises Issues Bonds with a $1,000 Face Value That