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5 December, 16:13

If a $1,000 face value coupon bond has a coupon rate of 4.55 percent, what is the coupon payment (in $) every year?

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  1. 5 December, 17:47
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    The coupon payment amounts to $45.5 per year

    Explanation:

    The coupon payment is the payment of the annual interest which is paid to the bondholder through the bond issuer until the debt instrument matures. In short, it is the payments which are periodic payments of he interest to the bondholders.

    So, computing the coupon payment as:

    Coupon payment = Face value of coupon * Coupon rate

    where

    Face value is $1,000

    Coupon rate os 4.55%

    Putting the values above:

    Coupon payment = $1,000 * 4.55%

    = $45.5
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