For a corporate bond with a face value of $1000 and a stated interest rate of 6%, the owner would receive which of the following?

Question

Quizplus · Accepted Answer

The stated interest rate is 6%, which means the bond pays 6% per year. In order to calculate the periodic payment, we need to divide this interest rate by the number of periods per year. Since we do not know the number of periods, we cannot determine the exact periodic payment.

However, we do know that corporate bonds typically pay interest semi-annually (twice per year), so the owner would receive 6%/2 = 3% every 6 months. 3% of $1000 is $30, so the owner would receive $30 every six months.

For a Corporate Bond with a Face Value of $1000