A 10year, 10 percent coupon bond has a dollar coupon of $100 (10 percent of $1,000); therefore,
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A 10‐year, 10 percent coupon bond has a dollar coupon of $100 (10 percent of $1,000); therefore, knowing the percentage coupon rate is the same as knowing the coupon payment in dollars.13 This bond would pay interest of $50 ($100 ÷ 2) on a specified date every six months. The $1,000 principal would be repaid 10 years hence. Similarly, a 5.5 percent coupon bond pays an annual interest amount of $55, payable at $27.50 every six months. Note that all the characteristics of a bond are specified exactly when the bond is issued.
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Related Book For
Investments Analysis And Management
ISBN: 9781118975589
13th Edition
Authors: Charles P. Jones, Gerald R. Jensen
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