Bond coupon payment Answer: b Diff: T
123. Fish & Chips Inc. has two bond issues outstanding, and both sell for $701.22. The first issue has an annual coupon rate of 8 percent and 20 years to maturity. The second has an identical yield to maturity as the first bond, but only 5 years remain until maturity. Both issues pay interest annually. What is the annual interest payment on the second issue?
a. $120.00
b. $ 37.12
c. $ 56.42
d. $ 29.68
e. $ 11.16
Bonds with differential payments Answer: c Diff: T
124. Semiannual payment bonds with the same risk (Aaa) and maturity (20 years) as your company’s bonds have a nominal (not EAR) yield to maturity of 9 percent. Your company’s treasurer is thinking of issuing at par some $1,000 par value, 20-year, quarterly payment bonds. She has asked you to determine what quarterly interest payment, in dollars, the company would have to set in order to provide the same effective annual rate (EAR) as those on the 20-year, semiannual payment bonds. What would the quarterly, dollar interest payment be?
a. $45.00
b. $25.00
c. $22.25
d. $27.50
e. $23.00
Multiple Part:
(The following information applies to the next three problems.)
A bond that matures in 10 years sells for $925. The bond has a face value of $1,000 and an 8 percent annual coupon.
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