Answer:
Each payment = $37.52778
Explanation:
Given:
Bond value = $1,000
Current yield = 7.17% = 0.0717
Bond quoted = 104.68%
Payment method = Semi-annual = 2 payment
Computation of annual coupon amount:
Current yield = Annual coupon / (Bond value × Bond quoted)
0.0717 = Annual coupon / ($1,000 × 104.68%)
0.0717 = Annual coupon / ($1,046.8)
Annual coupon = 0.0717 × $1,046.8
Annual coupon = $75.05556
Computation of each payment:
Each payment = Annual coupon amount / 2 payment
Each payment = $75.05556 / 2
Each payment = $37.52778
