Zack owns a bond that will pay him $35 each year in interest plus a $1,000 principal payment at maturity.The $1,000 principal payment is called the:
A) coupon.
B) par value.
C) discount.
D) yield.
E) call premium.

Question

Quizplus · Accepted Answer

The $1,000 principal payment is referred to as the bond's par value, also known as face value, nominal value, or maturity value. The coupon is the stated interest rate that the bond pays, typically stated as a percentage of the par value. The discount is a term used when the market value of the bond is less than its par value. The yield is the effective rate of return of the bond, taking into account both the interest payments and the principal repayment at maturity. The call premium is a fee paid by the issuer of a callable bond to call or retire the bond before its maturity date.

Zack Owns a Bond That Will Pay Him $35 Each