Question

The 7.2 percent bond of Blackford, Inc. has a yield to maturity of 7.3 percent. The bond matures in seven years, has a face value of $1,000, and pays semiannual interest payments. What is the amount of each coupon payment? a. $30.00 b. $36.00 c. $72.00 d. $34.10

Answer 1

The amount of each coupon payment is $36.00.

Step-by-step explanation:

To calculate the amount of each coupon payment, we need to divide the coupon rate by the number of coupon payments per year and then multiply it by the face value of the bond. In this case, the bond has a coupon rate of 7.2% and pays semiannual interest payments, so there are two coupon payments per year.

Coupon Payment = Coupon Rate / Number of Coupon Payments per Year * Face Value of the Bond

Coupon Payment = 7.2% / 2 * $1,000 = $36.00

Therefore, the amount of each coupon payment is $36.00, so the answer is option b. $36.00.