A $20,000 collateral bond has a coupon rate of 7% per year payable quarterly. The bond matures 30 years from now. At a market interest rate of 7% per year, compounded semiannually, the amount and frequency of the bond interest payments is: (choose one)
(a) $1400 per year
(b) $1400 per quarter
(c) $350 per year
(d) $350 per quarter
I/quarter = 20,000(0.07)/4
= $350
Answer is (d) $350 per quarter
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