How much bond interest will be paid to the bond holders on each interest date?

Question

Quizplus · Accepted Answer

The bond has a face value of $400,000 and an annual coupon rate of 4%, which means the bondholders will be paid $16,000 ($400,000 x 4%) in interest annually. Since the bond pays interest semi-annually, this amount will be divided by 2 to get the interest payment on each interest date, which is $8,000 ($16,000 / 2 = $8,000). Therefore, the correct answer is C.

How Much Bond Interest Will Be Paid to the Bond