Knowee
Questions
Features
Study Tools

Periodic receipts of interest by the bondholder are known as:Select one:a.the coupon rate.b.a zero-coupon.c.coupon payments.d.the default premium.

Question

Periodic receipts of interest by the bondholder are known as:Select one:a.the coupon rate.b.a zero-coupon.c.coupon payments.d.the default premium.

🧐 Not the exact question you are looking for?Go ask a question

Solution

The answer is c. coupon payments.

Here's why:

a. The coupon rate: This is the annual interest rate stated on a bond when it's issued. It's the rate of interest that the bond issuer will pay the bondholder.

b. A zero-coupon: This is a type of bond that does not pay interest during its life. Instead, it is sold at a discount to its face value and pays its face value at maturity.

c. Coupon payments: These are the periodic interest payments made to the bondholder during the life of the bond. They are called "coupon payments" because in the past, bondholders would clip coupons attached to the bonds and submit them to receive their interest payments.

d. The default premium: This is the additional amount a risky borrower must pay to attract lenders. It's not related to the periodic interest payments received by a bondholder.

This problem has been solved

Similar Questions

Interest on bonds is traditionally paid: Multiple Choiceonce per month.once per year.every day.twice per year.

On the maturity date of a bond, the bond owner receives: Group of answer choices a coupon payment only a coupon payment plus the purchase price the purchase price only a coupon payment plus the face value the face value only

If a bond pays interest semiannually, then it pays interest:Group of answer choicesevery six months.every three months.once per year.every two years.

Interest is usually associated withGroup of answer choicesbad debts.doubtful accounts.notes receivable.accounts receivable.

The rate at which bonds pay semi-annual interest payments to the bond holders is the:Group of answer choicesGrowth RateCoupon RateDiscount RateMarket Rate

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.