Question

3) What is the coupon payment of a 15-year $10,000 bond with a 9% coupon rate with semiannual payments

Answer 1

$450

Explanation:

The computation of coupon payment is shown below:-

Semiannual coupon payment amount = Future value × Coupon rate ÷ Coupon payments in a year

Where

Future value = $10,000

Coupon rate = 9%

Coupon payment in a year = 2

Now place the values to the above formula

So, the coupon payment is

= $10,000 × 9% ÷ 2

= $450

Therefore for computing the coupon payment we simply applied the above formula.