Phillip owns two (2) $1,000 corporate bonds issued by Exxon.The bond pays 5 percent.If interest is paid semiannually, what is the amount of the cheque that Phillip will receive at the end of each six-month period?

Question

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Since the bond pays 5 percent annually on a $1,000 face value, the annual interest per bond is $50 ($1,000 * 0.05). Since interest is paid semiannually, each payment is half of the annual interest, which is $25 per bond. Phillip owns two bonds, so he receives 2 * $25 = $50 at the end of each six-month period.

Phillip Owns Two (2) $1,000 Corporate Bonds Issued by Exxon