A bond has a par value of $1,000, a current yield of 6.60 percent, and semiannual coupon payments. The bond is quoted at 97.27. What is the amount of each coupon payment?

Multiple Choice

$33.00

$66.00

$36.11

$32.10

$64.20

To determine the amount of each coupon payment, we can use the bond's current yield formula and the given information.

### Given Data:
- **Par Value**: $1,000
- **Current Yield**: 6.60%
- **Quoted Price**: 97.27 (which means 97.27% of the par value)
- **Coupon Frequency**: Semiannual (twice a year)

### Step 1: Find the Annual Coupon Payment
The current yield is calculated using the formula:
\[
\text{Current Yield} = \frac{\text{Annual Coupon Payment}}{\text{Current Price}}
\]

Rearranging for the **Annual Coupon Payment**:
\[
\text{Annual Coupon Payment} = \text{Current Yield} \times \text{Current Price}
\]

Since the bond price is quoted at 97.27% of par, the **Current Price** is:
\[
\text{Current Price} = 97.27\% \times 1000 = 0.9727 \times 1000 = 972.70
\]

Thus:
\[
\text{Annual Coupon Payment} = 0.066 \times 972.70 = 64.20
\]

### Step 2: Find Each Semiannual Coupon Payment
Since the bond makes semiannual payments, each payment is half of the annual coupon:
\[
\text{Semiannual Coupon Payment} = \frac{64.20}{2} = 32.10
\]

### Answer:
The amount of each coupon payment is **$32.10**.

### Final Answer:
- **$32.10**

Would you like more details on bond calculations, or do you have any questions?

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1. How is the current yield related to bond pricing?
2. Why does a bond's price differ from its par value?
3. What factors impact the bond yield apart from the price?
4. How does semiannual coupon frequency impact the bond payments?
5. How do market interest rates affect bond prices and yields?

**Tip:** When dealing with bonds, remember that quoted prices are usually a percentage of par value.

A bond has a par value of $1,000, a current yield of 6.60 percent, and semiannual coupon payments. The bond is quoted at 97.27. What is the amount of each coupon payment?

Learn how to calculate the semiannual coupon payment for a bond with a $1,000 par value, 6.6% current yield, and quoted price of 97.27. This finance problem covers bond valuation and yield calculations, ideal for advanced high school or college-level finance studies.

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