Suppose a five-year, $1000 bond with annual coupons has a price of $900 and a yield...

Question

Question

Suppose a five-year, $1000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the bond’s coupon rate?

business finance

Answer 1

Answer #1

Bond price = PV of CFs from it.

Let X be the coupon amount.

Thus 4.2124X + 747.26 = 900

.4.2124X = 900 - 747.26

= 152.74

X = 152.74 / 4.2124

= 36.26

Coupon Rate = Coupon amount / Face Value

= 36.26 / 1000

= 3.63%

Pls comment, if any further assistance is required.

Answer 2

Similar Homework Help Questions

Suppose a five-year, $1,000 bond with annual coupons has a price of $900 and a yield...

Suppose a five-year, $1,000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the bond's coupon rate?
Suppose a five-year, $1000 bond with annual coupons has a price of $903.21 and a yield...

Suppose a five-year, $1000 bond with annual coupons has a price of $903.21 and a yield to maturity of 5.5 %. What is the bond's coupon rate?
Suppose a five-year, $1000 bond with annual coupons has a price of $903.35 and a yield...

Suppose a five-year, $1000 bond with annual coupons has a price of $903.35 and a yield to maturity of 5.6%. What is the bond's coupon rate? round to three decimal places

Suppose a five-year,$1,000 bond with annual coupons has a price of $901.51 and a yield to...

Suppose a five-year,$1,000 bond with annual coupons has a price of $901.51 and a yield to maturity of 6.4%.What is the bond's coupon rate?
Suppose a five-year, $1,000 bond with annual coupons has a price of $895.54 and a yield...

Suppose a five-year, $1,000 bond with annual coupons has a price of $895.54 and a yield to maturity of 6.1%.What is the bond's coupon rate? The bond's coupon rate is ____%. (Round to three decimal places.)
Suppose a five-year, $1,000 bond with annual coupons has a price of $898.63 and a yield...

Suppose a five-year, $1,000 bond with annual coupons has a price of $898.63 and a yield to maturity of 6.3%. What is the bond's coupon rate? The bond's coupon rate is 11%. (Round to three decimal places.)

Suppose a five-year, $1,000 bond with annual coupons has a price of $898.52 and a yield to matur...

Suppose a five-year, $1,000 bond with annual coupons has a price of $898.52 and a yield to maturity of 6.3%. What is the bond's coupon rate?
Suppose a five-year, $ 1,000 bond with annual coupons has a price of $ 900.92 and...

Suppose a five-year, $ 1,000 bond with annual coupons has a price of $ 900.92 and a yield to maturity of 6.4 % . What is the bond's coupon rate?
a) Suppose a five-year, $1,000 bond with semiannual coupons has a price of $957.35 and yield...

a) Suppose a five-year, $1,000 bond with semiannual coupons has a price of $957.35 and yield to maturity of 6%. What is the bond’s coupon rate? b) Hacker Software has 6.2 percent coupon bonds on the market with nine years to maturity. The bonds make semiannual payments and currently sell for 105 percent of par. What is the yield to maturity on this bond? (Write down the expression for YTM and then use a financial calculator or a spreadsheet program...

1.) Suppose a five-year, $1,000 bond with annual coupons has a price of $900.00 a...continues

1.) Suppose a five-year, $1,000 bond with annual coupons has a price of $900.00 and a yield to maturity of 6.0%. What is the bond's coupon rate?2.) The yield to maturity of a 2 year $1,000 bond with a 8.5% coupon rate and semiannual coupons is 9.1% APR, compounded semi-annually. What must its price be?