A bond has a par value of $1,000, a current yield of 6. 90 percent, and semiannual coupon payments. the bond is quoted at 101.17

Question

2 years ago

8

. What is the amount of each coupon payment?

1 answer:

poizon [28] · Answer 1 · 2023-05-24T09:57:30+03:00

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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