question archive Beatrix just bought a $1000 par value bond
Beatrix just bought a $1000 par value bond
Subject:FinancePrice:2.87 Bought7
Beatrix just bought a $1000 par value bond. The bond has a coupon rate of 7.5% (semi-annual payments) and the yield to maturity on the bond is 9.0%. What is the dollar amount of the first coupon payment that Beatrix will receive?
1) $42.50
2) $30.00
3) $37.50
4) $40.00
5) $45.00
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Answer:
Face Value = $1000
Coupon = 7.5%
Coupon payment = Semi-annual
in this question, yield to maturity has no importance.
The first coupon payment = 1000 * 0.075/2 = 1000 * 0.0375 = $37.5
