Investing in bonds is a way to lend money to a corporation or government. In return, you get paid interest, usually semi-annually, and the principal of the bond at its maturity (a specified future date).
The bond price at issue is called its face value, usually in the amount of $100 as a base price. The interest rate of a bond is called the coupon rate. The interest payment of a bond is called its coupon payment.

The equation to calculate the coupon payment is the same as the equation to calculate simple interest:

I = n ´ P ´ r ´ t

where

I = coupon payment
n = number of bonds purchased
P = bond price
r = coupon interest
t = time (semi-annually) 

For retirement income, Deborah’s grandmother wants to invest $10,000 in the Disney bonds . The listed price of the bond is $100 with a yield of 8.5% (coupon rate). How much money will her grandmother receive semiannually?

I = n ´ P ´ r ´ t

where
n ´ P = 10,000
r = 0.085
t = 0.5 (year)

therefore,

I = 10,000 ´ 0.085 ´ 0.5
  = $425

Deborah’s grandmother will receive a check of $425 from Disney every six months.

Michelle paid $9,525 for Treasury Bills (T- Bills) with a total face value of $10,000 and a maturity of one year. What return (yield) will that provide?

Estimate the answer:

Less than 4%
Between 4% and 5%
Over 5%