A person buys a newly issued bond that matures in 6 years with a face value of $1,000 and a coupon rate of 2.5%. How much money will the bondholder receive in the sixth year?

Question

Quizplus · Accepted Answer

In the sixth year, the bondholder will receive the final interest payment plus the face value of the bond. The annual interest payment is $1,000 * 2.5% = $25. Therefore, in the sixth year, the bondholder receives $25 in interest plus the $1,000 face value, totaling $1,025.

A Person Buys a Newly Issued Bond That Matures in 6