Question

Suppose a​ five-year, $ 1 comma 000$1,000 bond with annual coupons has a price of $ 896.61$896.61 and a yield to maturity of 6.4 %6.4%. What is the​ bond's coupon​ rate? The​ bond's coupon rate is nothing​%. ​(

Answer 1

Face value - Market price/Number of years = $1000 - $896.61/5 = $20.678
Face value + Market price / 2= $1000+$896.61/2 = $948.305
Yield to maturity = Annual coupon + (Face value - Market price)/Number of years / Face value + market price/2
0.064 = Annual coupon + $20.678/$948.305
60.69152 - $20.678 = Annual coupon
Annual coupon = $40.01352
Annual coupon rate = 4.00%