Question

An investor holds a FMC corporate bond with a face value of $5000, a coupon rate of 4%, and semiannual payments that matures on 01/15/2009. How much will the investor receive on 01/15/2009

Answer 1

Answer:

$5,100

Explanation:

 The computation of the investor received amount is shown below:

= Corporate bond face value + corporate bond face value × coupon rate × number of months ÷ total number of months in a year

= $5,000 + $5,000 × 4% × 6 months ÷ 12 months

= $5,000 + $100

= $5,100

On Semi annual payments we divide the interest rate by 2 or we considered the 6 months and divide it by the total number of months in a year