Question

For a 20-year bond with a $1,000 face value and an annual coupon of $50 at a yield to maturity of 9.5%, what will the final payment bondholders receive?

A) $950
B) $1,050
C) $1,000
D) $1,095

Answer 1

Bondholders of a 20-year bond with a $1,000 face value and an annual coupon of $50 will receive a final payment of $1,050 upon maturity, which is the sum of the face value and the last coupon payment. The answer is option B.

Step-by-step explanation:

The question you've asked relates to the final payment bondholders will receive for a 20-year bond with specified terms. When the bond reaches maturity, the bondholders will receive the final coupon payment plus the face value of the bond. In this case, with a $1,000 face value and an annual coupon of $50, the final payment will consist of the $1,000 face value plus the $50 coupon payment for the last year.

Therefore, the final payment that the bondholders will receive is $1,050, which corresponds to option B in your provided choices.