Financial Markets

Multiple Choice

By definition, which of the following statements are TRUE for COUPON BONDS?

  • The borrower is required to make only one contract-specitfied payment to be paid at the bond's maturity date. 
  • Mortgages are examples of coupon bonds. 
  • The borrower makes a contract-specified payment in every payment period until the bond's maturity date, at which time the borrower also pays the face value of the bond. 
  • Both A and B are true. 
  • Both B and C are true. 
A: coupon ≠ one payment: a coupon bond gets you always more than one payment, with the exception of zero coupon bonds. 
 
B: mortgages = example of debt instruments; a credit or loan for only real estate. 

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