(I)The Coupon Rate Is the Rate of Interest That the Issuer

question 10

Multiple Choice

(I) The coupon rate is the rate of interest that the issuer of the bond must pay.
(II) The coupon rate on old bonds fluctuates with market interest rates so they will remain attractive to investors.

• A) (I) is true, (II) false.
• B) (I) is false, (II) true.
• C) Both are true.
• D) Both are false.

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Definitions:

Congress

A bicameral legislative body in the federal government of the United States consisting of the Senate and the House of Representatives responsible for making national laws.

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The act of disbursing or paying out cash from a company to its stakeholders, such as dividends to shareholders or payments to suppliers.

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An accounting principle that treats a business as a separate entity from its owners for reporting and financial assessment purposes.