The 7.2 percent bond of Blackford, Inc.has a yield to maturity of 7.3 percent.The bond matures in seven years, has a face value of $1,000, and pays semiannual interest payments.What is the amount of each coupon payment?

Question

Quizplus · Accepted Answer

The bond has a 7.2% annual coupon rate, which means it pays 7.2% of its face value in interest each year. The face value is $1,000, so the annual interest is $1,000 * 7.2% = $72. Since the bond pays interest semiannually, each coupon payment is $72 / 2 = $36.00.

The 72 Percent Bond of Blackford, Inc