A $10,000 mortgage bond that is due in 20 years pays interest of $250 every 6 months.

Question:

A $10,000 mortgage bond that is due in 20 years pays interest of $250 every 6 months. The bond coupon rate is:

(a) 2.5% per year, payable quarterly

(b) 5.0% per year, payable quarterly

(d) 10% per year, payable quarterly

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...

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