A university issues a bond with a face value of $10,000 and a coupon rate of 5.65% that matures on 07/15/2020.The holder of such a bond receives coupon payments of $282.50.How frequently are coupon payments made in this case?
A)monthly
B)quarterly
C)semi-annually
D)annually
E)biannually

Question

Quizplus · Accepted Answer

The coupon rate and coupon payment information provide the necessary information to calculate the frequency of coupon payments. 
Annual coupon payment = face value x coupon rate = $10,000 x 5.65% = $565 
Dividing the annual coupon payment by the coupon payment received gives the frequency of coupon payments. 
$565 / $282.50 = 2 
Therefore, coupon payments are made every 6 months or semi-annually.

A University Issues a Bond with a Face Value of $10,000