Determine the interest payment for the following three bonds: 5.5 percent coupon corporate bond (paid semiannually), 6.45 percent coupon Treasury note, and a corporate zero-coupon bond maturing in 10 years. (Assume a $1,000 par value.)
A)$5.50, $6.45, $0, respectively
B)$27.50, $32.25, $0, respectively
C)$27.50, $32.25, $100, respectively
D)$55.00, $64.50, $0, respectively

Question

Quizplus · Accepted Answer

- 5.5 percent coupon corporate bond: The annual interest payment would be ($1,000 x 5.5%) = $55. Since the bond pays interest semiannually, each payment would be $27.50.
- 6.45 percent coupon Treasury note: The annual interest payment would be ($1,000 x 6.45%) = $64.50. Since the bond pays interest semiannually, each payment would be $32.25.
- Corporate zero-coupon bond: This bond does not pay any interest, so the interest payment is $0.

Determine the Interest Payment for the Following Three Bonds: 5