If the bond's par value is $1000,current yield be 6.90% and the bond is quoted at 101.17 then the each coupon payment is $34.9.
Given the bond's par value is $1000,current yield be 6.90% and the bond is quoted at 101.17.
We are required to find the amount of each coupon payment.
Bond value=$1000
Current yield=6.90%=0.0690
Bond quoted=101.17
Payment method=Semi annual =2 payments
Computation of annual coupon amount:
Current yield=Annual coupon/(Bond value*Bond quoted)
0.0690=Annual coupon/(1000*101.17%)
0.0690=Annual coupon/1011.7
Annual coupon=1011.7*0.0690
Annual coupon=$69.8073
Computation of each payment:
Each payment=Annual coupon /2 payment
Each payment=69.8073/2
Each payment=34.90365
Hence the amount of each payment of bond having par value of $1000 is $34.9.
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