Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a 14-year, semiannual coupon bond sells for $974.1

A 14-year, semiannual coupon bond sells for $974.17. The bond has a par value of $1,000...

Free

60.1K

Verified Solution

Question

Finance

A 14-year, semiannual coupon bond sells for $974.17. The bondhas a par value of $1,000 and a yield to maturity of 6.54 percent.What is the bond's coupon rate?

Answer & Explanation Solved by verified expert
3.6 Ratings (674 Votes)

Information provided:

Par value= Future value= $1,000

Time= 14 years*2= 28 semi-annual periods

Current price= present value= $974.17

Yield to maturity= 6.54%/2= 3.27% per semi-annual period

The coupon rate is computed by first calculating the coupon payment.

Enter the below in a financial calculator to compute the coupon payment:

FV= 1,000

N= 28

PV= -974.17

I/Y= 3.27

Press the CPT key and PMT to compute the coupon payment.

The value obtained is 31.2774.

The annual coupon payment is $31.2774*2= $62.5552.

Coupon rate= annual coupon payment/ Face value

                        = $62.5552/ 1,000

                        = 0.0626*100

                        = 6.26%.

In case of any query, kindly comment on the solution.
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A 14-year, semiannual coupon bond sells for $974.17. The bondhas a par value of $1,000 and a yield to maturity of 6.54 percent.What is the bond's coupon rate?

Other questions asked by students

Q

Review one new technology in molecular biology and its applications or its advance (more than 2000...

Biology
Q

How many words for pain can you think of? What are they? What is the best...

Psychology
Q

What is the correct days supply prescription Sertraline Zoloft 50mg Tablets Qty 60 Sig 1...

Biology
Q

All are true 26 A charge Q is placed at the corner of a cube...

Physics
Q

01 Section B Graph of specific heat at constant volume for a monoatomic gas is...

Physics
Q

6 5 4 3 2 3 A ON 1 4 2 3 3 2 ON...

Geometry
Q

Prepare the joumal entries| (1) On 02/01/2024, Bamey Rubble invested $20,000 of his...

Accounting
Q

can someone please help me with C ...

Accounting
Q

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31...

Accounting
Q

When a pension jurisdiction requires that the pension benefit incorporate a "joint and survivor" form...

Finance
Q

You are interested in taking out a loan of $30,000 from your local bank. The...

Finance
Q

Question 3 (2 points) For your birthday in February 2021 you received $3,000. Usually you...

Finance