A 7 percent bond has a yield to maturity of 6.5 percent.

A 7 percent bond has a yield to maturity of 6.5 percent. The bond matures in seven years, has a face value of $1,000, and pays semiannual interest payments. What is the amount of each coupon payment?

A. $30.00

B. $35.00

C. $60.00

D. $65.00

 

Explanation: 

Face value of the bond  = $1,000.00

Bond rate = 7%

Semiannual interest payments = 7%/2   = 3.50%

Therefore, the amount of each coupon payment = Face value of the bond * Semiannual interest payments

= $1,000 * 3.50%

= $1,000 * 0.035    =  answer is : $35.00


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