An investor holds a bond with a face value of $5 000, a coupon rate of 4%, and semi-annual payments that matures on 15/01/2012. How much will the investor receive on 15/01/2012?

Question

Quizplus · Accepted Answer

The investor will receive two semi-annual coupon payments of 4% of $5,000, which is $100 each. The first coupon payment would have been received on 15/07/2011 and the second on 15/01/2012. On 15/01/2012, the bond will also mature and the investor will receive the face value of $5,000. Therefore, the total amount the investor will receive on 15/01/2012 is $5,100 ($100 for the second coupon payment and the face value of $5,000).

An Investor Holds a Bond with a Face Value of $5