Which of the following is NOT a factor that determines the coupon rate of a company's bonds?
A) the amount of uncertainty about whether the company will be able to make all the payments.
B) the term of the loan.
C) the level of interest rates in the overall economy at the time.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

All the options listed (A, B, C) are factors that determine the coupon rate of a company's bonds. The amount of uncertainty about the company's ability to make payments affects the risk premium investors demand, the term of the loan influences the interest rate based on time value of money and risk over the period, and the level of interest rates in the overall economy sets a baseline for what investors expect to earn.

Which of the Following Is NOT a Factor That Determines