Question

Consider a 10 year bond with a face value of $1000 that has a coupon rate of 5.3%, with semiannual payments. What is the coupon payment for this bond?

Answer 1

Answer:

$26.5

Explanation:

the question says that the bond has a face value equal to 1000 dollars

coupon rate = 5.3%

and that the bond pays semiannually. semiannually means that it pays after 6 months.

semi annual coupon payment formula is given by = coupon rate/2 multiplied by face value

= 5.3%/2 multiplied by 1000

= 0.0265 x 1000

= $26.5

therefore from this calculation, the coupon payment on the bond is $26.5 dollars in every six months or semiannually.