The annual interest paid by a bond divided by the bond's face value is called the:

Question

Quizplus · Accepted Answer

The annual interest paid by a bond divided by the bond's face value is called the coupon rate. Therefore, option E is the best choice. Option A (coupon) is partially correct as it refers to the interest paid on a bond, but it does not specifically address the calculation of the interest rate. Option B (face value) refers to the amount of money that the bondholder will receive when the bond matures, not the interest rate. Option C (maturity) refers to the date when the bond will be repaid, and option D (yield to maturity) refers to the total return anticipated on a bond if it is held until it matures.

The Annual Interest Paid by a Bond Divided by the Bond's