Consider an 20-year bond with a coupon rate of 8% and a par value of $1,000. The cash flow for this bond is ________ every six months for the first 39 semi-annual periods and then ________ for the last (or 40th) six-month period.

Question

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The bond pays an 8% annual coupon in semi-annual installments, which is 4% every six months on a $1,000 par value, equating to $40. In the last period, this $40 coupon is paid along with the $1,000 par value, totaling $1,040.

Consider an 20-Year Bond with a Coupon Rate of 8