Question

4.) Which of the following bonds is trading at​ par?

A. a bond with a​ $2,000 face value trading at​ $1,987

B. a bond with a​ $2,000 face value trading at​ $2,012

C. a bond with a​ $1,000 face value trading at​ $1,000

D.a bond with a​ $1,000 face value trading at​ $999

6.) How much will the coupon payments be of a 20​-year $ 10,000 bond with a 8​% coupon rate and semiannual​ payments?

Answer 1

Question 4 - Answer is C

A bond trading at par implies the bond's current trade value is equal to its face or par value. In this case, in option C, price of bond = par value (or face value) = $1000

Question 6

Coupon Payment = Coupon Rate * Par Value

Coupon Payment = 8% * $10000 = $800

Now, the bond makes semi-annual payment. So each payment = $800/2 = $400