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16.07.2022 - 07:30

Kayla is considering investing in a bond with a face value of $12,000 with a coupon rate of 12% payable on a monthly basis. If she can get a 2.5% return per quarter on her money, what are the quarterl

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Kayla is considering investing in a bond with a face value of $12,000 with a coupon rate of 12% payable on a monthly basis. If she can get a 2.5% return per quarter on her money, what are the quarterly payments that she can receive from the bond?

Answers (1)

Wynema April 11, 2023 в 18:56

Kayla can receive quarterly payments of $900 from the bond. To calculate this, first find the annual coupon payment by multiplying the face value ($12,000) by the coupon rate (12%): $12,000 x 0.12 = $1,440 Since the coupon payments are payable monthly, divide the annual payment by 12: $1,440 / 12 = $120 Next, find the quarterly return on the investment by multiplying the investment amount ($12,000) by the quarterly return rate (2.5%): $12,000 x 0.025 = $300 Finally, add the annual coupon payment and divide by 4 to find the quarterly payment: ($1,440 + $300) / 4 = $360 + $540 = $900

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