A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply

Question

Bad White [126]

3 years ago

15

A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply

a YTM of 8%, what should be the coupon rate offered if the bond is to trade at par?

Business

1 answer:

djyliett [7] · Answer 1 · 2021-12-18T13:10:10+03:00

djyliett [7]3 years ago

5 0

Answer:

8% coupon rate would make the bond trade at par

Explanation:

To confirm the above ,I prepared a present value table with ytm at 8% and annual coupon at 8%, the resulting present value is $1000 the par value of the bond

Download xlsx

A company releases a​ five-year bond with a face value of​ $1,000 and coupons paid semiannually. If market interest rates imply

A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply