contestada

The face value of the bond is 100,000 and currently selling at 134,996. the bond matures in 11 years and the coupon payment is semi annually. If the maturity rate is 4.03% what is the coupon rate?

Respuesta :

Answer:

8%

Step-by-step explanation:

The computation of the coupon rate is as follows

But before that we have to determine the PMT which is shown below

Given that

PV = $134,996

FV = $100,000

NPER = 11 × 2 = 22

RATE = 4.03% ÷ 2 = 2.015%

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 $4,000

Now the coupon rate is

= Coupon payment ÷ Par value  × 2

= $4,000  ÷ 100,000  × 2

= 8%

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