DJ None of the above upon Tall 11) What is the coupon rate for a bond...

Question

Question

business finance

Answer 1

Answer #1

11) Price of bond = coupon * PVIFA (n,i)+ face value * PVIF (n,i)

1053.46 = Coupon * PVIFA (3 , 6%) + 1000 * PVIF (3 ,6%)

1053.46 = Coupon * 2.695423678 + 1000 * 0.850403986

Coupon = (1053.46 - 850.4039859) / 2.695423678

= $ 75.333617

Coupon Rate = Coupon Amount / Face Value * 100

= $ 75.333617/ 1,000 * 100

= 7.53%

= 8%

Hence the correct answer is B) 8%

Answer 2

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