Answer:
6.52%
Explanation:
Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.
As per Given Data
Face value = F = $1,000
Selling price = P = $1,036
Number of periods = n = 16.5 years x 2 = 33 periods
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
As we have the YTM, We need to calculate the Coupon Payment using YTM formula.
6.3% = [ C + ( $1,000 - 1,036 ) / 33 ] / [ ( $1,000 + 1,036 ) / 2 ]
6.3% = [ C - $1.09 ] / $1,018
C - $1.09 = $1,018 x 6.3%
C - $1.09 = $64.134
C = $64.134 + 1.09 = $65.224
Coupon Rate = 65.224 / $1,000 = 0.065224 = 6.5224%
