Coupon Versus Yield

This problem practices a core fixed income concept, separating the stated interest rate on a bond from the investor’s actual return. Candidates need to understand how coupon is set off principal, how yield reflects the cash flows an investor receives relative to the price paid, and why the two can differ when a bond trades above or below par. Interviewers ask this because it tests whether you can think clearly about bond pricing, market rates, and how returns are measured in debt markets, all of which are fundamental in leveraged finance and capital markets discussions.