Bond Pricing
A bond with a 5% coupon rate and $1,000 par value pays how much in annual interest?
Annual interest is calculated as par value multiplied by the coupon rate: $1,000 x 0.05 = $50 per year. Most bonds pay this semi-annually, so the investor would receive $25 every six months.
Complete Analysis & Legal Rationale
Annual interest is calculated as par value multiplied by the coupon rate: $1,000 x 0.05 = $50 per year. Most bonds pay this semi-annually, so the investor would receive $25 every six months.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.