A bond has a par value of $1,000 and a coupon rate of 6.5%. What is the dollar amount of each semiannual interest payment if you own 8 of these bonds?

Question

Quizplus · Accepted Answer

The annual interest payment per bond is calculated as:
Coupon rate x Par value = 6.5% x $1,000 = $65

Since this bond pays interest semiannually, we need to divide the annual interest payment by 2:
$65/2 = $32.50

Therefore, each semiannual interest payment is $32.50 per bond. If you own 8 of these bonds, the total dollar amount of each semiannual interest payment would be:
$32.50 x 8 = $260

Hence, the correct answer is (B) $260.

A Bond Has a Par Value of $1,000 and a Coupon