Question

scenario 3: a bond with a $6,000 face value matures in 5 years and has a coupon rate of 6%, paid semi - annually. create the payout table. double - click the light blue cells to edit them. day 1 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 5.5 year

Explanation:

Step1: Calculate semi - annual coupon payment

The formula for the semi - annual coupon payment \(C\) is \(C=\frac{\text{Coupon Rate}\times\text{Face Value}}{2}\). Given the face value \(F = 6000\) and coupon rate \(r=6\%=0.06\), then \(C=\frac{0.06\times6000}{2}=180\).

Step2: Create the payout table

Time	Payment
\(0.5\) Year	\(180\) (first semi - annual coupon)
\(1.0\) Year	\(180\)
\(1.5\) Year	\(180\)
\(2.0\) Year	\(180\)
\(2.5\) Year	\(180\)
\(3.0\) Year	\(180\)
\(3.5\) Year	\(180\)
\(4.0\) Year	\(180\)
\(4.5\) Year	\(180\)
\(5.0\) Year	\(180 + 6000=6180\) (last semi - annual coupon + face value)
\(5.5\) Year	\(0\) (bond has matured)

Answer:

Time	Payment
\(0.5\) Year	\(180\)
\(1.0\) Year	\(180\)
\(1.5\) Year	\(180\)
\(2.0\) Year	\(180\)
\(2.5\) Year	\(180\)
\(3.0\) Year	\(180\)
\(3.5\) Year	\(180\)
\(4.0\) Year	\(180\)
\(4.5\) Year	\(180\)
\(5.0\) Year	\(6180\)
\(5.5\) Year	\(0\)