What Happens to the Coupon Rate of a Bond That

question 26

Multiple Choice

What happens to the coupon rate of a bond that pays $80 annually in interest if interest rates change from 9% to 10%?

• A) The coupon rate increases to 10%.
• B) The coupon rate remains at 9%.
• C) The coupon rate remains at 8%.
• D) The coupon rate decreases to 8%.