A 6 percent bond has a yield to maturity of 6.5 percent. The bond matures in 7 years, has a face value of $1,000, and pays semiannual interest payments. What is the amount of each coupon payment?

Question

Quizplus · Accepted Answer

The bond has a 6% annual coupon rate, which means it pays 6% of its face value ($1,000) per year. Since it pays semiannual interest, each payment is half of the annual coupon: 0.06 * $1,000 / 2 = $30.00.

A 6 Percent Bond Has a Yield to Maturity of 6.5