Bill rate for a coupon-paying bond is equal to which of the following?

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Multiple Choice

Bill rate for a coupon-paying bond is equal to which of the following?

Explanation:
Coupon payments are fixed by the bond’s terms and are calculated as a percentage of the face value. The annual cash interest you receive equals the face value multiplied by the coupon rate (expressed as a decimal). So if the face value is F and the coupon rate is c, the yearly coupon is F × c. If the bond pays semiannually, each payment is (F × c)/2, but the total annual amount remains F × c. The market price doesn’t change this fixed relationship; it affects yield, not the coupon amount. The other options mix in market value or use unrelated arithmetic, which doesn’t reflect how coupons are determined.

Coupon payments are fixed by the bond’s terms and are calculated as a percentage of the face value. The annual cash interest you receive equals the face value multiplied by the coupon rate (expressed as a decimal). So if the face value is F and the coupon rate is c, the yearly coupon is F × c. If the bond pays semiannually, each payment is (F × c)/2, but the total annual amount remains F × c. The market price doesn’t change this fixed relationship; it affects yield, not the coupon amount. The other options mix in market value or use unrelated arithmetic, which doesn’t reflect how coupons are determined.

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