How much will the semiannual coupon payments be for a 10-year $5000 bond with a 9% coupon rate and semiannual payments a) $225 b) $450 c) $2250 d) $4500?

Answer: The correct semiannual coupon payment for the 10-year $5000 bond with a 9% coupon rate would be $225 .

Calculating Semiannual Coupon Payments and Bond Value

11 Sep 2023

Calculating Semiannual Coupon Payments and Bond Value

When dealing with bonds, the semiannual coupon payments represent the fixed interest payments that the bond issuer pays to the bondholder every six months. In this scenario, we are given a 10-year $5000 bond with a 9% coupon rate. The semiannual coupon payment is calculated by dividing the annual coupon payment by 2 since there are two coupon payments per year.

Given that the bond has a 9% coupon rate and a face value of $5000, the annual coupon payment would be 9% of $5000, which is $450. To find the semiannual coupon payment, we divide the annual coupon payment by 2, resulting in $225. Therefore, the correct answer is $225.

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Calculating Semiannual Coupon Payments and Bond Value

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