A 5-year bond with a face value of $1000 has a coupon rate of 6%, with...

A 5-year bond with a face value of $1000 has a coupon rate of 6%, with semiannual payments. What is the coupon payment for this bond per 6-month period? A. $60 B. not enough information C. $30

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Expert Solution

Face value of bond = $ 1000

Coupon rate = 6%

Bond is semi annual payment bond, that is in wveve 6 month bond investor is going to receive coupon

Since the coupon rate which is given to us is annual we have to find semiannual coupon rate so that we will able to find coupon payment for 6 month

Semiannual coupon rate = annual coupon rate ÷ 2

= 6% ÷ 2

= 3%

Semiannual coupon payment

= semiannual coupon rate × face value of bond

= 3% × 1000

= $ 30.00

so 6 month or semiannual coupon payment = $30.00

jeff jeffy answered 1 year ago

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