Which of the Following Statements Is Not Correct

question 30

Multiple Choice

Which of the following statements is not correct?

• A)The bond principal is the amount due at the maturity date of the bond.
• B)The coupon rate is used to determine the cash interest payments.
• C)The bond principal is used to determine the cash interest payments.
• D)The market rate of interest is used to determine the cash interest payments.

---

Definitions:

Interest Rate Swap

A financial derivative contract in which two parties exchange interest rate payments on a specified principal amount.

LIBOR

The London Interbank Offered Rate, an interest rate average calculated from estimates submitted by the leading banks in London and used as a reference for lending rates worldwide.

Notional Principal

The term refers to the principal amount, or face value, upon which interest payments or financial derivatives are calculated, without the need for physical exchange of the principal sum.

T-bond Contract

A futures contract based on Treasury bonds, which are long-term government debt securities with a maturity of more than 10 years.