Bond payment timeline: student worksheet and answers

Prepare a timeline for 40 minutes

Allow five minutes for concepts, ten for the timeline, ten for totals, ten for an incomplete scenario and five for a closing question. Give each pair three payment cards and one purchase card. Label the paper today, in one year and in two years. All amounts are fictional.

The bond has face value SEK 1,000 and a fixed annual coupon of six percent of that amount. It is bought for SEK 920 immediately after a coupon date, with exactly two years until repayment. Coupons are assumed to be paid once a year. In the first scenario, both coupons and the full face value are paid as agreed.

If the table does not fit, scroll it sideways.

Student worksheet: track cash received

Calculate the coupon from face value. Place each payment on the timeline and add up cash received after two years. The first coupon is held as cash without interest until the end date. There are no fees, taxes, currency changes or purchases of anything else in the model.

Compare ending cash with the SEK 920 purchase cost. Write the result in money and percent and label the period as two years. Also compare one coupon with the purchase cost, but give this ratio a different name from total return. It does not by itself capture repayment, timing or a missed payment.

Answer key: SEK 1,120 assumes all payments

The coupon is 1,000 × 0.06 = SEK 60 annually. Cash after two years is 60 + 60 + 1,000 = SEK 1,120. The difference from purchase cost is SEK 200, and 200 / 920 × 100 ≈ 21.74%. That is the result over the full two-year period under our assumptions, rather than an annual interest rate.

One annual coupon divided by purchase cost is 60 / 920 × 100 ≈ 6.52%. That ratio describes coupon amount relative to the price paid. Receiving the first coupon before repayment is part of the timeline. This worksheet does not calculate effective annual return or coupon reinvestment.

Teacher prompts: separate agreement from outcome

Show a second card where the first coupon is missed and the later coupon and repayment are not yet known. Ask whether ending cash can still be stated as SEK 1,120. It cannot: contractual amounts and expectations are not proof of received payment. Students need to know what actually gets paid and when.

Assess whether students keep each amount on the correct row and write a conditional answer. A share’s future sale price and a bond’s future payments are different uncertainties; our timeline does not make an asset risk-free. Investiq’s lessons support further percentage practice. This activity does not offer bonds, bond quotes or interest payments in the app.