A bond is quoted as 6 ¹/₂ 05.The bondholder would receive ____ interest per year.ions?

Question

Quizplus · Accepted Answer

The bond is quoted as "6 ¹/₂ 05", which means that the bond has a coupon rate of 6.5%. The "05" in the quote suggests that the bond pays interest semi-annually, or twice a year.

To calculate the amount of interest the bondholder would receive per year, we need to multiply the coupon rate by the face value of the bond (which is not given). However, since the answer choices only vary by a factor of 10, we can make an estimate by assuming that the face value of the bond is $1,000 (which is a typical face value for a bond).

Thus, the annual interest payment for the bond would be:

6.5% x $1,000 = $65

Therefore, the correct answer is C) $65.

A Bond Is Quoted as 6 ¹/₂ 05