Consider a bond you buy for $5,000, which pays you $250 a year for 5 years, and then pays back the $5,000. The face value of the bond is , the is $250, and the maturity is .
A)$250; coupon payment; 5 years
B)$5,000; coupon payment; 5 years
C)$5,000; face value; 1 year
D)$5,000; coupon payment; 1 year

Question

Quizplus · Accepted Answer

The face value of the bond is equal to the amount that will be paid back at maturity, which is $5,000 in this case. The coupon payment is the $250 paid annually for 5 years. Therefore, option B is the correct choice.

Consider a Bond You Buy for $5,000, Which Pays You