Multiple Choice QuestionA bond's annual interest rate is sometimes called the ______.Multiple choice question.collateralmaturity ratecoupon rateindenture
Question
Multiple Choice QuestionA bond's annual interest rate is sometimes called the ______.Multiple choice question.collateralmaturity ratecoupon rateindenture
Solution
The correct answer is "coupon rate".
A bond's annual interest rate is often referred to as the coupon rate. This is the rate of interest paid by bond issuers on the bond's face value. It is called a "coupon rate" because before electronic trading, a bondholder would actually clip a coupon from their physical certificate and redeem it for their interest payment.
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