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Sonbull [250]
3 years ago
6

A 15-year, annual coupon bond is priced at $984.56. The bond has a $1,000 face value and a yield to maturity of 6.5 percent. Wha

t is the coupon rate
Business
1 answer:
Bess [88]3 years ago
3 0

Answer:

6.35%

Explanation:

you can use the yield to maturity formula to determine the coupon:

YTM = {coupon + [(face value - market value) / n]} / [(face value + market value) / 2]

0.065 = {coupon + [(1,000 - 984.56) / 15]} / [(1,000 + 984.56) / 2]

0.065 = {coupon + 1.029} / 992.28

64.4982 = coupon + 1.029

coupon = 63.47

coupon rate = 63.47 / 1,000 = 0.06347 = 6.35%

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