Question

John has a $1000 bond with a 3% coupon. How much interest will John receive for this bond every six months?

a) $30
b) $15
c) $15 (assuming semi-annual interest payments)
d) The interest cannot be determined without more information.

Answer 1

John will receive $15 for this bond every six months assuming semi-annual interest payments.

Step-by-step explanation:

The interest that John will receive for his $1000 bond with a 3% coupon every six months can be calculated by multiplying the bond's face value by the coupon rate and dividing it by the number of interest payments in a year. In this case, since the bond pays interest every six months, there are two interest payments in a year. Therefore, the interest John will receive for this bond every six months is:

Interest = $1000 × 3% / 2 = $15

So the correct answer is c) $15 (assuming semi-annual interest payments).