A bond has a face value of $12,000, a price of $15,000, and coupon payments of $3000 for two years. The coupon rate of this bond is:
A) 15%.
B) 20%.
C) 10%.
D) 25%.
E) 30%.

Question

Quizplus · Accepted Answer

The coupon rate is calculated as the annual coupon payment divided by the face value of the bond. Here, the annual coupon payment is $3,000, and the face value is $12,000. Thus, the coupon rate is ($3,000 / $12,000) * 100% = 25%.

A Bond Has a Face Value of $12,000, a Price