Question

Gabriele Enterprises has bonds on the market making annual payments, with 10 years to maturity, a par value of $1,000, and selling for $890. At this price, the bonds yield 7.7 percent. What must the coupon rate be on the bonds

Answer 1

The coupon rate is 4.29%.

           

FV = 1000          

PMT  =  ?          

N  = 8          

I   = 5.10%          

PV =  -948          

           

Inputting the above details on the calculator you can find PMT

$42.92 PMT(5.1%,8,-948,1000)      

           

Alternatively, the PMT function in excel can also be used  

           

Coupon Rate = 42.92/1000  

= 4.29%    

                       

This gives you a coupon rate of 4.29%

Learn more about PMT here: brainly.com/question/24703884

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