Question

Consider a 10​-year bond with a face value of $ 1 comma 000 that has a coupon rate of 5.1 %​, with semiannual payments. a. What is the coupon payment for this​ bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this​ bond?\

Answer 1

Answer:

Answer is given below.

Explanation:

SOLUTION

a. Calculation of Coupon Payment

Coupon Payment = Face Value X Coupon Rate /2

Coupon Payment = 1000*5.5% /2

Coupon Payment = 55 /2= 27.5

Therefore the Coupon Payment is  = 27.51

cash flow diagram is attached.