6 Blackbum Inc has issued 30year 1000 face value 10 annual c

6. Blackbum Inc. has issued 30-year $1,000 face value, 10% annual coupon bonds, with a yield to maturity of 9.0%. The annual interest payment for the bond is ) $100 B) $90 C) $50 D) $45

Solution

ANSWER = A) $100

Face value = $1000

Annual coupon Rate = 10%

Annual interst payemt for the bond = $1000 * 10% = $100

Interest will always be calculated on the face value