Periodic interest payments on bonds are determined by multiplying the par value of the bond by the contract rate.

Question

Quizplus · Accepted Answer

This statement is true. Periodic interest payments on bonds are usually made semi-annually or annually and are determined by multiplying the par value of the bond by the contract rate (also called the coupon rate or nominal rate). For example, if a bond has a par value of $1,000 and a contract (coupon) rate of 5%, the periodic interest payment would be $50 ($1,000 x 5%).

Periodic Interest Payments on Bonds Are Determined by Multiplying the Par