Question

Determine the amount of semi-annual coupon paid for a 3% bond with a

face value of P100,000 which matures after 8 years. How many coupons

Answer 1

A semi-annual coupon bond is a bond that pays interest twice a year at a fixed rate.

To determine the amount of semi-annual coupon paid, you can use the following formula:

C = (r * FV) / n

Where:

C = coupon payment (semi-annual)

r = annual coupon rate (3% in this case)

FV = face value (100,000 in this case)

n = number of coupon payments per year (2 for semi-annual)

So, the semi-annual coupon payment for the bond is:

C = (0.03 * 100,000) / 2

C = 1500

The bond matures after 8 years, so the bond will pay 8*2 = 16 semi-annual coupons.