what is the 1st year interest on a convertible bond (20 yr, 10%)
To calculate the 1st year interest on a convertible bond, you'll need to know the face value of the bond and the coupon rate.
Here's how to calculate it:
1. Determine the face value of the bond: The face value, also known as the par value, is the amount that will be paid back to the bondholder at maturity. Once you know the face value, multiply it by the coupon rate to find the annual interest payment.
2. Calculate the annual interest payment: Multiply the face value of the bond by the coupon rate, expressed as a decimal. For example, if the face value is $1,000 and the coupon rate is 10%, the annual interest payment would be $1,000 * 0.10 = $100.
Therefore, the 1st year interest on a convertible bond with a 20-year term and a coupon rate of 10% would be $100.