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Fixed Income Q5

0. An organization issued bonds of par value $1,000 and a coupon rate of 5%. The coupons are paid quarterly. The periodic interest payment is:

  • Option : C
  • Explanation : Coupon rate of 5% paid quarterly means 5/4 = 1.25% of par is paid every quarter. On a face value of $1,000, this results in a periodic interest payment of $12.5. This amount is paid every quarter i.e. four times a year.
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