What is it called when a bond earns interest but is not yet redeemed?

What is it called when a bond earns interest but is not yet redeemed?

• A. Coupon
• B. Yield
• C. Maturity
• D. Interest

Answer: (A)

The term that describes when a bond earns interest but has not yet been redeemed is commonly referred to as the "Coupon." In bond terminology, the coupon represents the fixed interest payment that the bondholder receives over the life of the bond, typically expressed as a percentage of the bond's face value. This interest is paid at regular intervals, which can be annual, semi-annual, or quarterly, providing income to the bondholder before the bond's maturity or redemption. The other terms do not accurately represent this specific situation. Yield generally refers to the return on the bond based on the purchase price and coupon payments, rather than the earned interest itself. Maturity is the date when the bond will be redeemed, marking the end of its life cycle, and interest is a broader term that can apply to any earned interest, not specifically tied to bonds. Therefore, "Coupon" is the appropriate term that encapsulates the earnings on a bond before it reaches maturity.

The term that describes when a bond earns interest but has not yet been redeemed is commonly referred to as the "Coupon." In bond terminology, the coupon represents the fixed interest payment that the bondholder receives over the life of the bond, typically expressed as a percentage of the bond's face value. This interest is paid at regular intervals, which can be annual, semi-annual, or quarterly, providing income to the bondholder before the bond's maturity or redemption.

The other terms do not accurately represent this specific situation. Yield generally refers to the return on the bond based on the purchase price and coupon payments, rather than the earned interest itself. Maturity is the date when the bond will be redeemed, marking the end of its life cycle, and interest is a broader term that can apply to any earned interest, not specifically tied to bonds. Therefore, "Coupon" is the appropriate term that encapsulates the earnings on a bond before it reaches maturity.