Final answer:
To calculate the semiannual coupon payment for a bond with a $1,000 par value and a 7.05% current yield, divide the annual coupon payment by two. The annual coupon payment is $70.50, thus each semiannual coupon payment is $35.25.
Step-by-step explanation:
To calculate the amount of each coupon payment when given a bond with a par value of $1,000 and a current yield of 7.05%, we use the formula:
Coupon Payment = (Current Yield / 100) × Par Value
Given the current yield of 7.05%, the annual coupon payment can be calculated as follows:
Coupon Payment = (7.05% / 100) × $1,000 = $70.50
However, as the bond pays semiannual coupon payments, we need to divide this annual amount by two:
Semiannual Coupon Payment = $70.50 / 2 = $35.25
Therefore, the amount of each semiannual coupon payment for the bond is $35.25.