Suppose a five-year, $1 000 bond with annual coupons has a price of $897.83 and a yield to maturity of 6.3%. What is the bond's coupon rate?
Question
Solution 1
To find the bond's coupon rate, we need to use the formula for the price of a bond, which is:
P = C * (1 - (1 + r)^-n) / r + FV / (1 + r)^n
where: P = price of the bond = $897.83 C = annual coupon payment r = yield to maturity = 6.3% = 0.063 n = number of years until maturity = 5 years FV = face v Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
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