Interest Payments Determine the Interest Payment for the Following Three

question 96

Multiple Choice

Interest Payments Determine the interest payment for the following three bonds: 2.5 percent coupon corporate bond (paid semi-annually) ,3.15 percent coupon Treasury note,and a corporate zero coupon bond maturing in 10 years.(Assume a $1,000 par value.)

• A)$2.50, $3.15, $0, respectively
• B)$12.50, $15.75, $0, respectively
• C)$12.50, $15.75, $100, respectively
• D)$25.00, $31.50, $0, respectively

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Definitions:

Savings Account

A deposit account held at a bank that provides interest on the funds deposited.

Lump Sum

An individual disbursement occurring at a certain point, in contrast to periodic payments carried out sequentially.

Proceeds

The amount of money received from a sale or transaction.

Interest

The cost of borrowing money, typically expressed as a percentage of the principal, paid by the borrower for the use of lender’s funds.