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quester [9]
3 years ago
7

A 25-year, annual coupon bond is priced at $1,105.63. The bond has a $1,000 face value and a yield to maturity of 7.28 percent.

What is the coupon rate?
Business
1 answer:
Hunter-Best [27]3 years ago
8 0

Answer:

8.21%

Explanation:

The computation of the coupon rate is given below:

But before that PMT would be determined

Given that

NPER 25

RATE 7.28%

PV $1,105.63

FV $1,000

The formula is shown below:

=PMT(RATE,NPER,PV,FV,TYPE)

The present value comes in negative

After applying the above formula, the PMT is $82.09

Now the coupon rate is

= $82.09 ÷ $1,000

= 8.21%

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