Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / A semi-annual coupon rate of 7% means that the bond will pay $70 interest every 6 months

A semi-annual coupon rate of 7% means that the bond will pay $70 interest every 6 months

Finance

A semi-annual coupon rate of 7% means that the bond will pay $70 interest every 6 months. True O False

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

False

Coupon rates are always quoted annual. Theerfore, coupon rate of a semi-annual bonds needs to be converted to semi annual rate first. Therefore, semi annula rate will be 7% / 2 = 3.5%.

Semi annual coupon = (3.5 / 100) * 1000 = 35

Therefore, coupon payments will be $35.