Gabriel buys a $2,000 fixed-rate bond with a 4% coupon and five years to maturity. How much interest will he earn over the life of the bond? Select the best answer from the choices provided.
The coupon rate of the bond is 4% coupon=4/100×2000 coupon=$80 Time taken to maturity for the bond is 5 years number of terms=2 terms thus total amount of interest will be: 2×5×80 =$800
