Consider a 25-year bond with a face value of $1,000 that has a coupon rate of 5.3%, with semiannual payments.

a. What is the coupon payment for this bond?

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

a. What is the coupon payment for this bond? The coupon payment for this bond is ___. (Round to the nearest cent.)

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 25. The timeline shows a cash flow of $ 26.50 each from Period 1 to Period 24. In Period 25, the cash flow is $ 1,026.50.

PeriodPeriod

00

11

22

nothing

2424

2525

Cash FlowsCash Flows

nothing

$ 26.50$26.50

$ 26.50$26.50

nothing

$ 26.50$26.50

$ 1,026.50$1,026.50

B.The timeline starts at Period 0 and ends at Period 25. The timeline shows a cash flow of $ 26.50 each from Period 1 to Period 24. In Period 25, the cash flow is $ 1,000.

PeriodPeriod

00

11

22

nothing

2424

2525

Cash FlowsCash Flows

nothing

$ 26.50$26.50

$ 26.50$26.50

nothing

$ 26.50$26.50

$ 1,000$1,000

C.The timeline starts at Period 0 and ends at Period 50. The timeline shows a cash flow of $ 26.50 each from Period 1 to Period 49. In Period 50, the cash flow is $ 1,026.50.

PeriodPeriod

00

11

22

nothing

4949

5050

Cash FlowsCash Flows

nothing

$ 26.50$26.50

$ 26.50$26.50

nothing

$ 26.50$26.50

$ 1,026.50$1,026.50

D.The timeline starts at Period 0 and ends at Period 50. The timeline shows a cash flow of $ 26.50 each from Period 1 to Period 49. In Period 50, the cash flow is $ 1,000.

PeriodPeriod

00

11

22

nothing

4949

5050

Cash FlowsCash Flows

nothing