Question

A friend of yours purchased $120,000 (face value) of Triotron Corporation bonds for $147,525.24 on March 23 , 2018. The bonds have a 6% annual coupon rate and pay interest semiannually on September 22 nd and March 22nd. It is now midnight March 22, 2023, and your friend has received ten coupon payments. The bonds mature on September 22,2033. Required: Answer the following questions concerning this investment. 1. What is the dollar amount of the each coupon payment that your friend received each March and September?

Answer 1

The dollar amount of each coupon payment for the bond is $3,600.

Step-by-step explanation:

To find the dollar amount of each coupon payment, we need to calculate the semiannual interest payment. The face value of the bond is $120,000 with a 6% annual coupon rate. This means each year the bond pays 6% of the face value as interest. Since interest payments are made semiannually, the semiannual interest payment is (6% / 2) x $120,000 = $3,600. Therefore, your friend would receive $3,600 as coupon payment each March and September.