For a $10,000 bond with semi-annual coupons,you are given the following:
• The redemption value is $10,400
• The book value one period before the redemption date is $10,347.57
• Interest on the book value in the last coupon period is $369.93
What is the bond coupon rate,j₂?

Question

Quizplus · Accepted Answer

The bond coupon rate is the annual coupon payment divided by the face value of the bond. In this case, the annual coupon payment is $369.93 * 2 = $739.86, and the face value of the bond is $10,000. Therefore, the bond coupon rate is $739.86 / $10,000 = 7.4%.

For a $10,000 Bond with Semi-Annual Coupons,you Are Given the Following