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Gabriel buys a $2,000 fixed-rate bond with a 4% coupon and five years to maturity. How much interest will he earn over the life of the bond? Select the best answer from the choices provided.
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Gabriel buys a $2,000 fixed-rate bond with a 4% coupon and five years to maturity. How much interest will he earn over the life of the bond? Select the best answer from the choices provided.

User Jahirul Islam Mamun
by
8.2k points

1 Answer

4 votes
The coupon rate of the bond is 4%
coupon=4/100×2000
coupon=$80
Time taken to maturity for the bond is 5 years
number of terms=2 terms
thus total amount of interest will be:
2×5×80
=$800

User Evilpilaf
by
9.0k points
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