A bond has a par value of $1,000, a current yield of 7.606 percent, and semi-annual interest payments. The bond quote is 98.6. What is the amount of each coupon payment?

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Quizplus · Accepted Answer

The bond quote of 98.6 means the bond is priced at 98.6% of its par value, which is $986. The current yield is 7.606%, so the annual coupon payment is 7.606% of $986, which is approximately $75.00. Since the bond pays interest semi-annually, each coupon payment is $75.00 / 2 = $37.50.

A Bond Has a Par Value of $1,000, a Current