Question

11. Assume that somehow, Andy managed to get that loan from a bank officer whith whom he went to school. But instead of using it as intended, he uses half of the loan to purchase the ABC Energy coupon bond below. How much would he receive in coupons payment through the entire call period?

Answer 1

$60 for each of the year

Explanation:

Coupon rate always to be consider on face value of bond . In this case 6% should be calculated on face value of bond for three years

$1000 multiply with 6%=$60 for each year.

A coupon rate is the yield paid by a fixed-salary security; a fixed-pay security's coupon rate is basically simply the yearly coupon installments paid by the guarantor comparative with the security's face or standard worth. The coupon rate, or coupon installment, is the yield the security paid on its issue date. This yield changes as the estimation of the security changes, hence giving the security's respect development.