What is the coupon rate for a bond with 3 years until maturity, a price of $1,053.46, and a yield to maturity of 6%? Interest is

Question

3 years ago

6

paid annually.

1 answer:

9966 [12] · Answer 1 · 2022-01-02T09:10:51+03:00

Answer:

Coupon rate is 8%

Explanation:

We can ascertain the coupon rate by first of all determine the amount of coupon with pmt excel function below:

=pmt(rate,nper,-pv,fv)

rate is yield to maturity of 6%

nper is the number of coupons before maturity i.e 3 annual coupons in three years

pv is the current market price of $1,053.46

fv is the par value of $1,000

=pmt(6%,3,-1053.46,1000)=80

Coupon rate=pmt/face value=80/1000=8%