Question

question 2 of 4
scenario 2: a bond with a $8,000 face value matures in 4 years and has a coupon rate of 3%, paid annually. create
the payout table.
double - click the light blue cells to edit them.
day 1 $8,000.00
0.5 year
1.0 year
1.5 year
2.0 year
2.5 year
3.0 year
3.5 year
4.0 year
4.5 year
5.0 year

Explanation:

Step1: Calculate annual coupon payment

The formula for annual coupon payment \(C\) is \(C = \text{Face Value}\times\text{Coupon Rate}\). Given face value \(F = 8000\) and coupon rate \(r=3\%=0.03\), then \(C=8000\times0.03 = 240\).

Step2: Fill the payout table

Since the coupon is paid annually, at the end of each year (\(1.0\) year, \(2.0\) year, \(3.0\) year) the payout is the coupon payment of \(240\). At \(4.0\) year (maturity), the payout is the sum of the coupon payment and the face value, so \(240 + 8000=8240\). The other time - points (\(0.5\) year, \(1.5\) year, \(2.5\) year, \(3.5\) year, \(4.5\) year, \(5.0\) year) have a payout of \(0\) as the coupon is paid only at the end of each full year.

Answer:

Time	Payout
\(0.5\) Year	\(0\)
\(1.0\) Year	\(240\)
\(1.5\) Year	\(0\)
\(2.0\) Year	\(240\)
\(2.5\) Year	\(0\)
\(3.0\) Year	\(240\)
\(3.5\) Year	\(0\)
\(4.0\) Year	\(8240\)
\(4.5\) Year	\(0\)
\(5.0\) Year	\(0\)