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Nostrana [21]
3 years ago
6

The current price of a 10 year $1000 par value bond is $1158.91. Interest on this bond is paid every 6 months, and the nominal a

nnual yield is 14%, Given these facts, what is the annual coupon rate on this bond
Business
1 answer:
tatuchka [14]3 years ago
4 0

Answer:

16.22%

Explanation:

To calculate the annual coupon rate, you can use the following formula:

Coupon Rate= (Annual coupon payment/Par value of the bond)* 100%

Annual coupon payment= $1158.91*14%= 162.2

Par value of the bond= $1000

Coupon Rate= (162.2/1000)*100%

Coupon Rate=0.1622*100%

Coupon Rate= 16.22%

The annual coupon rate on this bond is 16.22%

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