Assume that today’s date is February 15, 2015. Robin Hood Inc. bond is an annual-coupon bond. Par value of the bond is $1,000. Calculate annual coupon interest payments.
The answer should be calculated to two decimal places
| Company |
Price |
Coupon Rate |
Maturity Date |
YTM |
Current Yield |
Rating |
| Robin Hood | 122.414 | 11.921 | 2-15- 2031 | – | – | D |
In order to calculate the annual coupon interest payments for Robin Hood Inc.’s bond, we need to consider a few key details provided in the information.
Firstly, we know that this is an annual-coupon bond with a par value of $1,000. This means that the bond pays interest annually, and the face value of the bond is $1,000, which is the amount that will be returned to the bondholder at maturity.
The coupon rate of the bond is given as 11.921%. This is the annual interest rate that the bond will pay on its face value, which in this case is $1,000. To calculate the annual coupon interest payments, we simply multiply the coupon rate by the face value:
Annual Coupon Interest Payments = Coupon Rate × Face Value
Annual Coupon Interest Payments = 11.921% × $1,000
Annual Coupon Interest Payments = $119.21
So, the annual coupon interest payment for Robin Hood Inc.’s bond is $119.21, rounded to two decimal places.
It’s important to note that this calculation assumes that the bond will not be sold or traded before its maturity date, and it does not take into account any changes in the bond’s price or yield over time. The coupon payment remains constant throughout the life of the bond. Additionally, the Yield to Maturity (YTM) and current yield provided in the information are not used in this calculation of the annual coupon interest payments, as they are related to the bond’s current market conditions and its yield to maturity, respectively.
In summary, as of February 15, 2015, Robin Hood Inc.’s annual-coupon bond with a par value of $1,000 pays an annual coupon interest of $119.21. This fixed interest payment will continue until the bond matures on February 15, 2031.
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