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 coupon payment \(C\) is calculated as \(C=\text{Face Value}\times\text{Coupon Rate}\). Given face value \(F = 8000\) and coupon rate \(r=3\%=0.03\), so \(C = 8000\times0.03=\$240\)

Step2: Fill the payout table

• At \(t = 1.0\) year: Coupon payment of \(\$240\)
• At \(t = 2.0\) year: Coupon payment of \(\$240\)
• At \(t = 3.0\) year: Coupon payment of \(\$240\)
• At \(t = 4.0\) year: Coupon payment of \(\$240\) and face - value repayment of \(\$8000\). The total payout is \(240 + 8000=\$8240\)

All 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 \(\$0\) since the coupon is paid annually.

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	\(\$0\)