A bond purchaser bought a bond from which she receives $800 a year from the issuer.If the face value of the bond is __________ then the coupon rate is __________.

Question

Quizplus · Accepted Answer

Since the purchaser receives $800 a year from the issuer, we can assume that this is the coupon payment. The coupon rate is calculated by dividing the coupon payment by the face value of the bond, and multiplying by 100%. So, if we assume a face value of $10,000:

Coupon rate = ($800/$10,000) x 100% 
Coupon rate = 8%

Therefore, the correct answer is choice C, with a face value of $10,000 and a coupon rate of 8%.

A Bond Purchaser Bought a Bond from Which She Receives