A corporate bond's fixed coupon rate of interest results in: a. fluctuations in the market interest rate on the bond. b. a fixed capital gain upon the maturity of the bond. c. fixed interest payments. d. the bond's fixed market price

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Business

Jaydan Sanders

21 October, 20:28

A corporate bond's fixed coupon rate of interest results in: a. fluctuations in the market interest rate on the bond. b. a fixed capital gain upon the maturity of the bond. c. fixed interest payments. d. the bond's fixed market price

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Skyler Cardenas · Answer 1

c. fixed interest payments

Explanation:

Bonds are debt securities issued by Corporates to raise long term finance which is usually for more than 3 years.

The issuer of such securities agree to pay a rate of return, in the form of coupon interest payments periodically, apart from repayment of the principal amount at the end of the period.

The coupon payments represent interest yield whereas difference in face value and market value represents capital gain yield.

A fixed coupon rate of interest results in a bond paying fixed amount of interest each year.