Period 59 60 $21.5 $21.5 $21.5 $21.5 $21.5 +$2,000 A corporation issues a bond that generates...

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Question

Period 59 60 $21.5 $21.5 $21.5 $21.5 $21.5 +$2,000 A corporation issues a bond that generates the above cash flows. If the pe

business finance

Answer 1

Answer #1

Period = 3 months => Coupons are paid quarterly

Number of years = 60/4 = 15 years

Coupon Payment = $21.5

Annual Coupon payment = 21.5*4 = $86

Par Value = $2000

Hence, coupon rate = 86/2000 = 0.043 or 4.3%

Hence, option (c)

Answer 2

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