What is the coupon rate of a 30-year,$1000 bond with semi-annual payments of $22.50?

Name: What is the coupon rate of a 30-year,$1000 bond with semi-annual payments of $22.50?
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Question

Quizplus · Accepted Answer

The coupon rate is the annual interest rate that the bond pays.

The bond has a face value of $1000 and pays semi-annual payments of $22.50.

First, we need to calculate the total annual interest:

$22.50 x 2 = $45 (semi-annual payment x 2)

$45 / $1000 = 0.045

The annual interest rate is 4.5%, so the answer is C.

What Is the Coupon Rate of a 30-Year,$1000 Bond with Semi-Annual