Determine the interest payment for the following three bonds: 2.5 percent coupon corporate bond (paid semiannually), 3.15 percent coupon Treasury note, and a corporate zero-coupon bond maturing in 10 years. (Assume a $1,000 par value.)
A)$2.50, $3.15, $0, respectively
B)$12.50, $15.75, $0, respectively
C)$12.50, $15.75, $100, respectively
D)$25.00, $31.50, $0, respectively

Question

Quizplus · Accepted Answer

For the 2.5 percent coupon corporate bond, the semiannual interest payment is calculated as (2.5/2)% * $1,000 = $12.50

For the 3.15 percent coupon Treasury note, the semiannual interest payment is calculated as (3.15/2)% * $1,000 = $15.75

For the corporate zero-coupon bond maturing in 10 years, there are no periodic interest payments, so the interest payment is $0.

Therefore, the best choice is B, which represents the correct interest payments for all three bonds.

Determine the Interest Payment for the Following Three Bonds: 2