Determine the semi-annual interest payment for the following three bonds: 5.5 percent coupon corporate bond, 6.45 percent coupon Treasury note, and a corporate zero-coupon bond maturing in 10 years. (Assume a $1,000 par value.)
A) $5.50, $6.45, $0, respectively
B) $27.50, $32.25, $0, respectively
C) $27.50, $32.25, $100, respectively
D) $55.00, $64.50, $0, respectively

Question

Quizplus · Accepted Answer

Semi-annual interest payments are calculated by dividing the annual coupon rate by two and applying it to the par value. For the 5.5% corporate bond, the semi-annual payment is 5.5% / 2 * $1,000 = $27.50. For the 6.45% Treasury note, it's 6.45% / 2 * $1,000 = $32.25. The zero-coupon bond pays no interest until maturity, so its semi-annual interest payment is $0.

Determine the Semi-Annual Interest Payment for the Following Three Bonds