A 5-year treasury bond with a coupon rate of 8% has a face value of $1000. What is the semi-annual interest payment?
A) $80
B) $40
C) $100
D) None of the above

Question

Quizplus · Accepted Answer

The semi-annual interest payment is calculated by taking half of the annual coupon rate and multiplying it by the face value of the bond. In this case, half of 8% is 4%, so the semi-annual interest payment is 4% x $1000 = $40. Therefore, the best choice is B.

A 5-Year Treasury Bond with a Coupon Rate of 8