A bond pays semiannual interest payments of $38.25. What is the coupon rate if the par value is $1,000?

Name: A bond pays semiannual interest payments of $38.25. What is the coupon rate if the par value is $1,000?
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Question

Quizplus · Accepted Answer

The semiannual interest payment represents half of the annual coupon payment. Thus:
Annual coupon payment = 2 x $38.25 = $76.50
Coupon rate = annual coupon payment / par value = $76.50 / $1,000 = 7.65%

A Bond Pays Semiannual Interest Payments of $38