A $1,000 face value bond is currently quoted at 100.8. the bond pays semiannual payments of $22.50 each and matures in six years

Question

lyudmila [28]

4 years ago

15

A $1,000 face value bond is currently quoted at 100.8. the bond pays semiannual payments of $22.50 each and matures in six years

. what is the coupon rate?

Mathematics

1 answer:

gtnhenbr [62] · Answer 1 · 2021-12-26T15:09:12+03:00

gtnhenbr [62]4 years ago

5 0

We are given with
F = 1000
b = 22.50
P = 100.8

We use the formula to get the coupon rate
b = Fib
Substituting the given values
22.50 = 1000 ib
ib = 0.0255 or 2.25%

The coupon rate is 2.25%