A 3.75 percent coupon bond is currently quoted at 88.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own four of these bonds?
A)$56.25
B)$75.00
C)$100.46
D)$110.00
E)$200.93

Question

Quizplus · Accepted Answer

First, we need to calculate the price per bond:
88.3% x $1,000 = $883

Next, we need to calculate the semi-annual coupon payment:
Coupon rate = 3.75% / 2 = 1.875%
Coupon payment = Coupon rate x Face value = 1.875% x $1,000 = $18.75

Since we own four of these bonds, the total semi-annual coupon payment is:
4 x $18.75 = $75.00

Therefore, the best choice is B.

A 375 Percent Coupon Bond Is Currently Quoted at 88