Suppose a 5-year, $ 1 comma 000 bond with annual coupons has a price of $ 900 and a yield to maturity of 6 %. What is the bond

Question

3 years ago

12

's coupon rate?

1 answer:

NeX [460] · Answer 1 · 2022-09-21T10:41:15+03:00

Answer:

3.63%

Explanation:

For computing the bond coupon rate, first we have to determine the PMT by applying the PMT formula that is shown on the attachment

Given that,

Present value = $900

Future value = $1,000

Rate of interest = 6%

NPER = 5 Years

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the PMT is $36.26

Now the coupon rate is

= $36.26 ÷ $1,000

= 3.63%

Suppose a 5​-year, $ 1 comma 000 bond with annual coupons has a price of $ 900 and a yield to maturity of 6 %. What is the​ bond