A bond pays semiannual interest payments of $44.50. What is the coupon rate if the par value is $1,000?

Question

Quizplus · Accepted Answer

The coupon rate is calculated by dividing the annual interest payment by the par value of the bond. Since the bond pays semiannual interest payments of $44.50, the annual interest payment is $44.50 * 2 = $89. The par value of the bond is $1,000. Therefore, the coupon rate is ($89 / $1,000) * 100% = 8.90%.

A Bond Pays Semiannual Interest Payments of $44