A 5 year semiannual coupon bond with a face value of $1,000 trades at $938. The...

A 5 year semiannual coupon bond with a face value of $1,000 trades at $938. The market-determined discount rate is 9%. What is the coupon rate? Answer in percent and round to two decimal places.

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Expert Solution

M = $1000, n = 5 * 2 = 10 semi-annual periods, i = 9%/2 = 4.5% (semi-annually), P = $938

938 = C * 7.912718 + 643.928

294.0723 = C * 7.912718

C = $37.16

Annual coupon rate = (2 * $37.16)/$1000 = 7.43%

jeff jeffy answered 2 years ago

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