1. which of the following is ture of a zero coupon bond? A. the bond makes no co
ID: 2642904 • Letter: 1
Question
1. which of the following is ture of a zero coupon bond?
A. the bond makes no coupon payment
B. the bond sells at a premium prior to maturity
C. the bond has a zero par value
D. the bond has no value until the year it matures because there are no positive cash flows until then.
2. The Johnson Corporation issues a bond which has a coupon rate of 10.20%, a yield to maturity of 10.55%, a face value of $1,000 and a market price of $850. Therefore, the annual interest payment is
A.$102
B. $120
C. $101.75
D. $105.50
Explanation / Answer
1. which of the following is ture of a zero coupon bond?
A. the bond makes no coupon payment
2. The Johnson Corporation issues a bond which has a coupon rate of 10.20%, a yield to maturity of 10.55%, a face value of $1,000 and a market price of $850. Therefore, the annual interest payment is
Annual interest payment = 10.20%*1000
Annual interest payment = $ 102
Answer
A.$102
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