Which of the following is correct for a bond priced at $1,100 that has 10 years remaining until maturity,and a 10% coupon,with semiannual payments?
A) Each payment of interest equals $50.
B) Each payment of interest equals $55.
C) Each payment of interest equals $100.
D) Each payment of interest equals $110.

Question

Quizplus · Accepted Answer

Each payment of interest equals $50. The bond has a 10% coupon, which means that the annual interest payment is $100 ($1,100 x 10%). Since the interest payments are made semiannually, each payment is $50.

Which of the Following Is Correct for a Bond Priced