The formula to calculate the Coupon Payment is:
\[ \text{Coupon Payment} = \text{Face Value} \times \left( \frac{\text{Annual Coupon Rate}}{\text{Number of Payments per Year}} \right) \]
The coupon payment is the interest paid by a bond issuer to a bondholder at each payment period until the bond matures. The payment schedule can be quarterly, semiannually, or annually, depending on the agreed time. The coupon rate determines the total amount paid as coupon payments in a year.
Let's assume the following for Bond A:
Step 1: Calculate the coupon payment:
\[ \text{Coupon Payment} = \$1,000 \times \left( \frac{10\%}{2} \right) = \$1,000 \times 5\% = \$50 \]
Therefore, the coupon payment for Bond A is $50 per period.
