Question

Suppose a bond has a $1,000 face value, a market price of $1,045.00, and pays a coupon of $80 annually. What is the bond's coupon rate

Answer 1

Answer:

8%

Explanation:

The Coupon rate can be defined as the rate of interest that is paid by issuers of bond on the face value of the bond. This is the periodic interest rate that is paid by bond issuers to their purchasers.

For this question

The face value of the bond is 1000 dollars

The coupon is 80 dollars

Such that We have

80/1000

= 0.08

This is 8% coupon rate.