A bond pays semiannual interest payments of $27.55. What is the coupon rate if the par value is $1,000?

Question

Quizplus · Accepted Answer

The semiannual interest payments are $27.55, so the annual interest payments would be 2*$27.55 = $55.10.

To calculate the coupon rate, we divide the annual interest payments by the par value:

$55.10 / $1,000 = 0.0551

Multiplying by 100 to convert to a percentage, we get a coupon rate of 5.51%.

Therefore, the correct answer is B.

A Bond Pays Semiannual Interest Payments of $27