A coupon bond with 12 years remaining to maturity has a yield to maturity of 6% and a face value of $1,000 that is returned to t
he bondholder at maturity. The bond has a current price of $820.
Which of the following comes closest to the coupon payment of this bond?
A) $32.98 B) $38.53 C) $40.92 D) $43.30 E) $45.69
Which of the following comes closest to the coupon payment of this bond?
A) $32.98 B) $38.53 C) $40.92 D) $43.30 E) $45.69
1 answer:
Answer:
B) $38.53
Explanation:
We use the PMT Formula for this question. The calculation is presented on the attachment below:
Data provided in the question
Present value = $820
Future value = $1,000
Rate of interest = 6%
NPER = 12 years
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, the coupon payment of this bond is $38.53
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