Question : The coupon rate of a debenture is:
Option 1: The interest rate paid on the debenture
Option 2: The face value of the debenture
Option 3: The market value of the debenture
Option 4: The conversion price of the debenture
Correct Answer: The interest rate paid on the debenture
Solution : The correct answer (a) The interest rate paid on the debenture
The coupon rate of a debenture refers to the interest rate paid on the debenture by the issuing company to the debenture holders. It is the fixed annual interest rate that is specified at the time of issuance and is stated as a percentage of the face value of the debenture. The coupon rate represents the periodic interest payment that debenture holders receive as a return on their investment. It is typically paid semi-annually or annually, depending on the terms of the debenture. The coupon rate is multiplied by the face value of the debenture to determine the amount of interest payment.
Question : The market value of equity shares is determined by:
Option 1: Face value
Option 2: Book value
Option 3: Earnings per share
Option 4: Demand and supply factors
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