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Periodic receipts of interest by the bondholder are known as:Select one:a.the coupon rate.b.a zero-coupon.c.coupon payments.d.the default premium.

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Solution

The answer is c. coupon payments.

Here's why:

a. The coupon rate: This is the annual interest rate stated on a bond when it's issued. It's the rate of interest that the bond issuer will pay the bondholder.

b. A zero-coupon: This is a type of bond that does not pay interest during its life. Instead, it is sold at a discount to its face value and pays its face value at maturity.

c. Coupon payments: These are the periodic interest payments made to the bondholder during the life of the bond. They are called "coupon payments" because in the past, bondholders would clip coupons attached to the bonds and submit them to receive their interest payments.

d. The default premium: This is the additional amount a risky borrower must pay to attract lenders. It's not related to the periodic interest payments received by a bondholder.

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