How much will the coupon payments be of a 30 year $10000 bond with a 4.5% coupon rate and semi-annual payments?
Answer and Explanation:
Final answer:
The coupon payment of a 25-year $1000 bond with a 4.5% coupon rate with quarterly payments is $11.25 per quarter or every three months.
If you know the face value of the bond and its coupon rate, you can calculate the annual coupon payment by multiplying the coupon rate times the bond's face value. For example, if the coupon rate is 8% and the bond's face value is $1,000, then the annual coupon payment is . 08 * 1000 or $80.
The coupon payment will be $450. Given information: Coupon rate: 9% Face value: $10,000.
Answer and Explanation:
5000 ∗ 4.5 % + ( 5000 − 1876 ) / 5 ( 5000 + 4876 ) / 2 = 5.06 %
For instance, say you own a bond with a par value of $1,000 whose current price is $900. Its coupon rate is 2%, and it matures five years from now. To calculate the semi-annual bond payment, take 2% of the par value of $1,000, or $20, and divide it by two. The bond, therefore, pays $10 semiannually.
For example, a $1,000 bond with a coupon of 7% pays $70 a year. Typically these interest payments will be semiannual, meaning the investor will receive $35 twice a year.
In general we can show that for a bond with face value V , with n outstanding interest payments at rate r each, (1) P = V (1 + i)−n + rV an|i , where i is the current interest rate per semi-annual period. In formula (1), P is referred to as the price of the bond, r the coupon rate, and i the yield rate.
Coupon Rate = Annualized Interest Payment / Par Value of Bond * 100%read more” refers to the rate of interest paid to the bondholders by the bond issuers. read more. In other words, it is the stated rate of interest paid on fixed-income securities, primarily applicable to bonds.
Say that a $1,000 face value bond has a coupon interest rate of 5%. No matter what happens to the bond's price, the bondholder receives $50 that year from the issuer.
How much will the coupon payments be of a 20 year $500 bond with a 8% coupon rate and quarterly payments?
Answer and Explanation:
Coupon payment per period = Face value of the bond × Coupon rate × Coupon period / Total period. Coupon payment per period = $500 × 8% × 4/12. Coupon payment per period = $13.33.
If a $1,000 face value coupon bond has a coupon rate of 3.75 percent, then the annual coupon payment is calculated by multiplying the face value by the coupon rate. Therefore, the annual coupon payment is 0.0375 times $1,000, which equals $37.50.
If a $5,000 coupon bond has a coupon rate of 13 percent, then the annual coupon payment can be calculated by multiplying the face value of the bond by the coupon rate. Thus, the annual coupon payment is $5,000 multiplied by 13%, which equals $650.
Answer and Explanation:
The yield to maturity is 7.16%.
A bond's yield to maturity is the total amount received by the bond owner when it matures, expressed as a percentage. This includes the combination of interest payments and the return of principal. A bond's coupon rate is the interest rate paid throughout the bond's life.
For example, a bond trading at $900 with a $1,000 face value and a $60 coupon has a 6% coupon rate and a current yield of 6.7%.
- Coupon payment = face value * (annual coupon rate/number of payments per year)
- Current yield = annual coupon payments/market value of the bond.
- Coupon payment = face value * (annual coupon rate/number of payments per year)
- Divide the annual coupon rate by the number of payments per year. For instance, if the bond pays semiannually, divide the coupon rate by 2.
- Multiply the result with the bond's face value to get the coupon payment.
The formula for the coupon rate consists of dividing the annual coupon payment by the par value of the bond. For example, if the interest rate pricing on a bond is 6% on a $100k bond, the coupon payment comes out to $6k per year.
| Name | Coupon | Price |
|---|---|---|
| GT2:GOV 2 Year | 4.88 | 99.91 |
| GT5:GOV 5 Year | 4.13 | 99.92 |
| GT10:GOV 10 Year | 4.00 | 95.00 |
| GT30:GOV 30 Year | 4.25 | 91.64 |
What is the semiannual coupon payment for a 10% bond with a $1000 par?
Most bonds pay interest semi-annually, which means bondholders receive two payments each year. 1 So with a $1,000 face value bond that has a 10% semi-annual coupon, you would receive $50 (5% x $1,000) twice per year for the next 10 years.
Once you buy T-bonds, you get a fixed-interest payment called the coupon every six months.
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|---|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
Understanding Semi-Annual Bond Basis (SABB)
Corporate bonds typically pay a coupon semi-annually, which means that, if the interest rate on the bond is 4%, each $1000 bond will pay the bondholder a payment of $20 every six months (a total of $40 per year).
By multiplying the bond's face value by its coupon interest rate, you can figure out what the dollar amount of that interest rate is each year. For example, if the bond's face value is $1000, and the interest rate is 5%, by multiplying 5% by $1000, you can find out exactly how much money you will receive each year.
