Question

The Sisyphean Company has a bond outstanding with a face value of $ 1,000 that reaches maturity in 9 years. The bond certificate indicates that the stated coupon rate for this bond is 9.9​% and that the coupon payments are to be made semiannually. How much will each semiannual coupon payment​ be?

Answer 1

Information provided:

Par value= $1,000

Coupon rate= 9.90%/2= 4.95% per semi-annual period

Time= 9 years

Semi-annual coupon payment= semi-annual coupon rate*par value of bond

                                                = 0.0495*$1,000

                                                 = $49.50.

Therefore, the semi-annual coupon payment is $49.50.