The face value of a 30-year coupon bond is $100,000.If it pays $1,500 every 3 months,what is its coupon rate?

Question

Quizplus · Accepted Answer

First, we need to find the annual coupon payment by multiplying the quarterly payment by 4:

$1,500 x 4 = $6,000

Next, we divide the annual coupon payment by the face value of the bond and multiply by 100 to get the coupon rate:

($6,000 / $100,000) x 100 = 6%

Therefore, the coupon rate is 6%, which corresponds to choice C).

The Face Value of a 30-Year Coupon Bond Is $100,000