Which of the following is used to compute bond cash interest payments?
A) Current yield.
B) Yield to maturity.
C) Coupon rate.
D) None of the options.

Question

Quizplus · Accepted Answer

Coupon rate is the annual interest rate stated on a bond. It is used to compute the cash interest payments that the bond issuer must make to the bondholders. Current yield measures the annual return generated by the bond's interest payments relative to its current market price. Yield to maturity is the total return anticipated on a bond if it is held until it matures. Therefore, neither of these options is used to compute bond cash interest payments.

Which of the Following Is Used to Compute Bond Cash