Question

A bond with a coupon rate of 6 percent that pays interest semiannually and is priced at par will have a market price of _____ and interest payments in the amount of _____ each.

Answer 1

Answer:

$1,000 and $30

Explanation:

We assume the market price or face value be $1,000

And the given coupon rate is 6% which is paid on semi annually basis

So, the interest payment is

= Market price or face value × coupon rate ÷ 2

= $1,000 × 6% ÷ 2

= $30

In the semi annual basis, the rate is half and the time is doubles and the same is applied above