Question：Which one of the following best describes the term 'coupon rate' as applies to bonds?
A. The minimum rate of interest required to maintain the market value of the bonds at or above par value.
B. The annual interest received on the face value of the units of the bonds.
C. The total rate of return on the bonds, taking into account capital repayment as well as interest payments.
D. The annual interest received divided by the current ex-interest market price of the bonds.
The correct answer is: The annual interest received on the face value of the units of the bonds.
Learn this!
The annual interest received divided by the current ex-interest market price of the bonds is the interest yield.
The total rate of return on the bonds is the redemption yield.
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