Consider a

20-year

Government of Canada bond with a face value of

$1,000

that has a coupon rate of

5.4%,

with semi-annual payments.

a. What is the coupon payment for this bond?

b. Draw the cash flows for the bond on a timeline.

Question content area bottom

Part 1

a. What is the coupon payment for this bond?

The coupon payment for this bond is

$enter your response here.

(Round to the nearest cent.)

Part 2

b.

Draw the cash flows for the bond on a timeline.

Select the timeline below that shows the correct cash flows for this bond. (Select the best choice below.)

A.

The timeline starts at Period 0 and ends at Period 20. The timeline shows a cash flow of $ 27.00 each from Period 1 to Period 19. In Period 20, the cash flow is $ 1,027.00.

Period

0

1

2

19

20

Cash Flows

$27.00

$27.00

$27.00

$1,027.00

B.

The timeline starts at Period 0 and ends at Period 20. The timeline shows a cash flow of $ 27.00 each from Period 1 to Period 19. In Period 20, the cash flow is $ 1,000.

Period

0

1

2

19

20

Cash Flows

$27.00

$27.00

$27.00

$1,000

C.

The timeline starts at Period 0 and ends at Period 40. The timeline shows a cash flow of $ 27.00 each from Period 1 to Period 39. In Period 40, the cash flow is $ 1,000.

Period

0

1

2

39

40

Cash Flows

$27.00

$27.00

$27.00

$1,000

D.

The timeline starts at Period 0 and ends at Period 40. The timeline shows a cash flow of $ 27.00 each from Period 1 to Period 39. In Period 40, the cash flow is $ 1,027.00.

Period

0

1

2

39

40

Cash Flows

$27.00

$27.00

$27.00

$1,027.00