Question

Sal bought a $1000 bond that has a coupon rate of 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

A: $35

Explanation:

Answer 2

Sal's 1,000 bond has a coupon rate of 7%, meaning he receives 7% of the face value in interest every year.

7% of 1,000 is $70. If he receives interest semiannually, he will receive half this amount twice per year.
$70 divided by two is $35.

Answer is A) $35