Bond basics · Question 2 of 12
What does the coupon of a bond denote?
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Answer
- C The annual interest rate based on the nominal value
Explanation
The coupon states how much interest the issuer pays each year on the nominal value. A bond with a 3% coupon and a nominal value of 1,000 euros brings 30 euros a year. The term comes from the interest vouchers that used to be detached from bond certificates.