A Treasury bond's coupon rate is based on the market yield at the time it is first issued.

Question

Quizplus · Accepted Answer

A Treasury bond's coupon rate is determined based on the market yield at the time it is first issued. The market yield is the prevailing interest rate at the time of issuance and the coupon rate is set accordingly to ensure that the bond is priced at par value. However, once the bond is issued, the coupon rate remains fixed and does not change with changes in market yields.

A Treasury Bond's Coupon Rate Is Based on the Market