Determine the semi-annual interest payment for the following three bonds: 2.5 percent coupon corporate bond, 3.15 percent coupon Treasury note, and a corporate zero-coupon bond maturing in 10 years. (Assume a $1,000 par value.)
A) $2.50, $3.15, $0, respectively
B) $12.50, $15.75, $0, respectively
C) $12.50, $15.75, $100, respectively
D) $25.00, $31.50, $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 2.5% corporate bond, the semi-annual payment is 0.025 * $1,000 / 2 = $12.50. For the 3.15% Treasury note, it's 0.0315 * $1,000 / 2 = $15.75. A 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