Ask Question
27 June, 06:20

A bond has a par value of $1,000, a current yield of 7.17 percent, and semiannual coupon payments. The bond is quoted at 104.68. What is the amount of each coupon payment?

+2
Answers (1)
  1. 27 June, 06:24
    0
    Each payment = $37.52778

    Explanation:

    Given:

    Bond value = $1,000

    Current yield = 7.17% = 0.0717

    Bond quoted = 104.68%

    Payment method = Semi-annual = 2 payment

    Computation of annual coupon amount:

    Current yield = Annual coupon / (Bond value * Bond quoted)

    0.0717 = Annual coupon / ($1,000 * 104.68%)

    0.0717 = Annual coupon / ($1,046.8)

    Annual coupon = 0.0717 * $1,046.8

    Annual coupon = $75.05556

    Computation of each payment:

    Each payment = Annual coupon amount / 2 payment

    Each payment = $75.05556 / 2

    Each payment = $37.52778
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A bond has a par value of $1,000, a current yield of 7.17 percent, and semiannual coupon payments. The bond is quoted at 104.68. What is ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers