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Suppose a​ five-year, $1,000 bond with annual coupons has a price of $901.45 and a yield...

Suppose a​ five-year, $1,000 bond with annual coupons has a price of $901.45 and a yield to maturity of 5.7%.

What is the​ bond's coupon​ rate?

Solutions

Expert Solution

M = $1000, n = 5, P = $901.45, i = 5.7%

901.45 = C * 4.246966 + 757.923

143.527 = C * 4.246966

C = $33.80

Coupon rate = Annual coupon/Par Value = $33.80/$1000 = 3.38%

jeff jeffy answered 2 years ago
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