A bond with a 7% coupon that pays interest semi-annually and is priced at par will have a market price of _____ and interest payments in the amount of _____ each.
A) $1,007; $70
B) $1,070; $35
C) $1,070; $70
D) $1,000; $35
E) $1,000; $70

Question

Quizplus · Accepted Answer

A bond priced at par means its market price is equal to its face value, which is typically $1,000. With a 7% annual coupon rate and semi-annual payments, the interest payment every six months would be half of 7% of $1,000, which is $35.

A Bond with a 7% Coupon That Pays Interest Semi-Annually