Question

a bond has a $1,000 face value, a market price of $1,045, and pays interest payments of $65.50 every year. what is the coupon rate? group of answer choices 6.55 percent 6.26 percent 7.12 percent 3.28 percent 8.0 percent

Answer 1

If a bond has a $1,000 face value and pays interest payments of $65.50 every year, the coupon rate is  6.55%.

The coupon rate is the amount of income an investor can anticipate receiving from a bond. It is determined at the time the bond is issued and is determined by calculating by dividing the total annual coupon payments by the par value.

Coupon rate = Interest amount / Face value of the bond

Coupon rate = $65.50 / $1,000

Coupon rate = 6.55%

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