Which of the following is NOT a factor that determines the coupon rate of a company's bonds?
A)The amount of uncertainty about whether the company will be able to make all the payments.
B)The term of the loan.
C)The level of interest rates in the overall economy at the time.
D)All of these are factors that determine the coupon rate of a company's bonds.

Question

Quizplus · Accepted Answer

All of the factors mentioned - uncertainty about payment, loan term, and interest rates in the economy - contribute to the determination of a company's bond coupon rate. None of these factors can be disregarded when considering how a company sets the interest rate on its bonds.

Which of the Following Is NOT a Factor That Determines