The coupon rate is used to calculate the bond's interest amount, while the yield is used to calculate the present value of both the interest amount and principal amount of the bond.

Question

Quizplus · Accepted Answer

This is correct. The coupon rate is the fixed percentage rate at which interest is paid on a bond's face value, and it is used to calculate the interest amount. The yield, on the other hand, is the rate of return earned by an investor holding the bond, and it is used to calculate the present value of both the interest and principal payments. So, both concepts are related to the bond's interest, but they serve different purposes.

The Coupon Rate Is Used to Calculate the Bond's Interest