A Php 450,000.00 bond is redeemable at Php 550,000.00 after 5 years. Coupons are given at 5% convertible semi-annually. Find the amount of the semi-annual coupon.

To find the amount of the semi-annual coupon, we'll break down the problem as follows:

### Given Data:
- **Face Value of the Bond (P)**: Php 450,000.00
- **Redemption Value**: Php 550,000.00 (but this is not needed for the coupon calculation)
- **Coupon Rate**: 5% per annum, **convertible semi-annually**.
- **Time to Maturity**: 5 years (but this is also not needed for the coupon calculation).
  
Since the bond pays 5% **annually** but is convertible **semi-annually**, we need to adjust the coupon rate to account for the semi-annual payments. This means that each coupon payment will be based on half the annual coupon rate.

### Steps to Calculate the Semi-Annual Coupon:

1. **Annual Coupon Rate**: 5% or 0.05.
2. Since the coupons are given **semi-annually**, the semi-annual rate will be:
   \[
   \text{Semi-Annual Rate} = \frac{5\%}{2} = 2.5\% = 0.025
   \]
3. The **semi-annual coupon amount** is calculated by multiplying the face value of the bond by the semi-annual rate:
   \[
   \text{Semi-Annual Coupon} = 450,000 \times 0.025 = 11,250
   \]

### Final Answer:
The semi-annual coupon amount is **Php 11,250.00**.

Would you like more details or have any questions?

Here are 5 related questions you might consider:
1. How does the redemption value affect bond valuation?
2. What is the total interest earned over 5 years from the coupons?
3. How are convertible bonds different from regular bonds?
4. What would the annual coupon amount be if the coupon were not convertible semi-annually?
5. How can bondholders calculate the yield to maturity (YTM)?

**Tip:** To find the total coupon income from a bond, multiply the semi-annual coupon by the number of periods (for 5 years, that’s 10 periods).

Learn how to calculate the semi-annual coupon for a Php 450,000 bond with a 5% interest rate convertible semi-annually. This step-by-step guide walks through bond valuation, interest rate adjustments, and calculating coupon payments. Suitable for Grades 10-12.

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