Question

In: Finance

The 7.2 percent bond of Blackford, Inc. has a yield to maturity of 7.3 percent


The 7.2 percent bond of Blackford, Inc. has a yield to maturity of 7.3 percent. The bond matures in seven years, has a face value of $1,000, and pays semiannual interest payments. What is the amount of each coupon payment? 

  • $30.00 

  • $36.00 

  • $72.00 

  • $34.10


A bond's annual interest divided by its face value is referred to as the: 

  • coupon rate 

  • market rate. 

  • current yield. 

  • yield-to-maturity. 

  • call rate.

Solutions

Expert Solution

Coupon payment = Face value * coupon rate / number of payments in a year

Coupon payment = 1,000 * 0.072/2

Coupon payment = $36

Annual interest/Face value = Coupon rate


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