Question

Sal bought a $1000 bond that has a coupon rate 7%. The bond will mature in 10 years. How much interest will he receive semiannually?

A)$35

B)$70

C)$140

D)$700

Answer 1

Answer is A $35 I just took it and got it right.

Explanation:

Answer 2

C)$140

Explanation:

To find how much Sal would receive semiannually, we first need to find how much he gets with his coupon.

Bond Price = $1000

Rate = 7% or 0.07

Total = Bond Price x Rate

Total = $1000 x 0.07

Total = $70

Now since we know that a semiannual payment means 2 payments in a year, we simply multiply the total by 2 to find the semiannual payment.

Overall = $70 x 2

Overall = $140

This means that Sal will receive a total of $140 per year for the next 10 years.