A person buys a newly issued bond that matures in 6 years with a face value of $1,000 and a coupon rate of 5%.How much money will the bondholder receive in the sixth year?

Question

Quizplus · Accepted Answer

The bond has a face value of $1,000 and a coupon rate of 5%, which means it pays $50 in interest annually (5% x $1,000). Since the bond matures in 6 years, the bondholder will receive the face value of $1,000 plus the final interest payment of $50 in the sixth year, for a total of $1,050. Therefore, choice A is the correct answer.

A Person Buys a Newly Issued Bond That Matures in 6