The correct answer is: D. both a and c
The coupon rate of a bond is the interest rate that the bond issuer agrees to pay to the bondholders. It is usually expressed as a percentage of the face value of the bond. For example, a bond with a face value of $1,000 and a coupon rate of 5% would pay $50 in interest each year.
The coupon rate is also called the nominal rate or the quoted rate. It is important to note that the coupon rate is not the same as the yield to maturity. The yield to maturity is the actual return that an investor will earn on a bond, taking into account both the coupon payments and the price of the bond.
The coupon rate is set when the bond is issued. It is usually based on the prevailing interest rates at the time of issuance. The coupon rate can be fixed or floating. A fixed-rate bond pays the same interest rate for the life of the bond. A floating-rate bond pays a variable interest rate, which is usually tied to a benchmark interest rate such as the LIBOR.
The coupon rate is an important factor in determining the price of a bond. The price of a bond will fluctuate based on changes in interest rates. When interest rates go up, the price of bonds will go down. When interest rates go down, the price of bonds will go up.
The coupon rate is also an important factor in determining the yield to maturity of a bond. The yield to maturity is the annualized rate of return that an investor will earn on a bond, assuming that the bond is held to maturity. The yield to maturity is calculated by taking the present value of all of the future coupon payments and the principal payment, and dividing by the purchase price of the bond.
The coupon rate is a key piece of information that investors should consider when evaluating a bond. The coupon rate is the interest rate that the bond issuer agrees to pay to the bondholders. It is usually expressed as a percentage of the face value of the bond. The coupon rate is also called the nominal rate or the quoted rate. It is important to note that the coupon rate is not the same as the yield to maturity. The yield to maturity is the actual return that an investor will earn on a bond, taking into account both the coupon payments and the price of the bond.