Question

Juan buys a bond with a fixed coupon rate of 3%. Six months later, similar
bonds that are issued have a coupon rate of 4%. Which of the following is
TRUE? *

Answer 1

The coupon rate is the annual income that is expected by an investor.

What is a coupon rate?

Your information is incomplete as the options aren't given. Therefore, an overview of the coupon rate will be given.

The coupon rate simply means the annual income that an investor can expect to receive when he or she holds a particular bond.

It's fixed when the bond is being issued and calculated by dividing the sum of the annual coupon payment by the par value.

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