Final answer:
The coupon payment for a bond with a face value of $1,000 and a semiannual coupon rate of 5.2% is $26 per payment, occurring every six months. To illustrate this on a timeline, one would draw a line with increments every six months, notating $26 payments, and $1,026 at the end of year 25.
Step-by-step explanation:
To calculate the coupon payment for a bond with a face value of $1,000 and a coupon rate of 5.2% with semiannual payments, you need to first figure out the annual coupon payment by multiplying the coupon rate by the face value. Then, divide the annual payment by 2 to account for the semiannual payment structure. The annual coupon payment would be $1,000 * 5.2% = $52, and each semiannual payment would be $52 / 2 = $26.
To represent the cash flows of this bond on a timeline, you would draw a horizontal line and mark the start point as 0, which represents the present. Then, at every six-month interval (or halfway point between each year marker), you would place a marker and write $26 to indicate the semiannual coupon payment. This continues until the 25th year, at which point you would add the face value of the bond ($1,000) to the last coupon payment, marking it as $1,026 on the timeline.