Question

A 5.5 percent coupon bond is currently quoted at 88.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own four (4) of these bonds?

Answer 1

Face value of Bond = $1,000

Coupon rate = 5.5%

Coupon frequency in a year = 2

No. of Bond = 4

Thus,

$\textup{Total Semi-annual coupon payment} = \frac{\textup{Coupon rate}}{2}*\textup{Face value*No. of Bond}$

$\textup{Total Semi-annual coupon payment} = \frac{0.055}{2}*1000*4$

$\large \textup{Total Semi-annual coupon payment} = \$110$

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.