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.

Question

Quizplus · Accepted Answer

The market rate of interest is used to determine the price at which a bond will sell in the market, not the cash interest payments. The cash interest payments are determined by the coupon rate applied to the bond's principal amount.

Which of the Following Statements Is Not Correct