A $10,000 face value treasury bond is quoted at a price of 102.311 with a current yield of 4.28 percent. what is the coupon rate

Question

2 years ago

14

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1 answer:

nataly862011 [7] · Answer 1 · 2023-07-10T21:44:40+03:00

The coupon rate is 4.37 %.

Explanation:

The current yield formula can be used to determine the coupon payment which would thereafter be used to compute coupon rate as required:

current yield = coupon payment/current market price

current yield=4.28%

coupon payment=unknown

current market price=102.311 % *$10,000

current market price=$102.311

4.28%=coupon payment /$ 102.311

coupon payment=$10231.1*4.28%

coupon payment=$437.89108

coupon rate=coupon payment/face value

coupon rate=$437.89108 /$10,000

coupon rate=4.37%

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