Volbeat Corporation has bonds on the market with 19.5 years to maturity, a YTM of 11.2...

Volbeat Corporation has bonds on the market with 19.5 years to maturity, a YTM of 11.2 percent, and a current price of $936. The bonds make semiannual payments. Required: What must the coupon rate be on the bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Coupon rate % =

Solutions

Expert Solution

Price of bond = coupon * PVIFA (n,i)+ face value * PVIF (n,i)

936 = Coupon * PVIFA ( 39 , 5.6) + 1000 * PVIF (39 ,5.6%)

936 = Coupon *15.72449493800740 + 1000 * 0.1194282834715880

Semi Annual Coupon = (936-119.4282834715880 ) / 15.72449493800740

= $ 51.9299169701593

Semi Annual Coupon Rate = Coupon Amount / Face Value * 100

= $ 51.9299169701593 / 1,000 * 100

=5.19299169701593 %

Annual Coupon Rate = 5.19299169701593 % *2

= 10.39%

Hence the correct answer is 10.39%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

McConnell Corporation has bonds on the market with 15 years to maturity, a YTM of 7.8...

McConnell Corporation has bonds on the market with 15 years to maturity, a YTM of 7.8 percent, a par value of $1,000, and a current price of $1,276.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? Multiple Choice 11.06% 21.98% 10.96% 17.22% 8.59%

McConnell Corporation has bonds on the market with 19 years to maturity, a YTM of 11.0...

McConnell Corporation has bonds on the market with 19 years to maturity, a YTM of 11.0 percent, a par value of $1,000, and a current price of $1,156.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? Multiple Choice 13.08% 25.99% 12.98% 22.48% 11.22%

McConnell Corporation has bonds on the market with 14 years to maturity, a YTM of 6.8...

McConnell Corporation has bonds on the market with 14 years to maturity, a YTM of 6.8 percent, a par value of $1,000, and a current price of $1,156.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?

Ashes Divide Corporation has bonds on the market with 13 years to maturity, a YTM of...

Ashes Divide Corporation has bonds on the market with 13 years to maturity, a YTM of 7.4 percent, and a current price of $1,186.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round your intermediate calculations.) rev: 09_18_2012 Multiple Choice 9.66% 19.36% 9.76% 16.32% 8.14% Grohl Co. issued 17-year bonds a year ago at a coupon rate of 12 percent. The bonds make semiannual payments. If the YTM on these bonds is...

McConnell Corporation has bonds on the market with 23.5 years to maturity, a YTM of 7...

McConnell Corporation has bonds on the market with 23.5 years to maturity, a YTM of 7 percent, a par value of $1,000, and a current price of $1,051. The bonds make semiannual payments. What must the coupon rate be on these bonds?

Ponzi Corporation has bonds on the market with 14.5 years to maturity, a YTM of 5.49...

Ponzi Corporation has bonds on the market with 14.5 years to maturity, a YTM of 5.49 percent, and a current price of $894.44. The bonds make semiannual payments. What must the coupon rate be on these bonds?

McConnell Corporation has bonds on the market with 17 years to maturity, a YTM of 10.0...

McConnell Corporation has bonds on the market with 17 years to maturity, a YTM of 10.0 percent, a par value of $1,000, and a current price of $1,196.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? Multiple Choice 20.81% 10.39% 24.90% 12.53% 12.43%

Ashes Divide Corporation has bonds on the market with 15 years to maturity, a YTM of...

Ashes Divide Corporation has bonds on the market with 15 years to maturity, a YTM of 12.0 percent, and a current price of $1,176.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round your intermediate calculations.)

Angsana Corporation has bonds on the market with 11.5 years to maturity, a YTM of 11.4...

Angsana Corporation has bonds on the market with 11.5 years to maturity, a YTM of 11.4 percent, and a current price of $835.66. The bonds make semiannual payments. The coupon rate on these bonds must be _____ percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

McConnell Corporation has bonds on the market with 10.5 years to maturity, a YTM of 7.1...

McConnell Corporation has bonds on the market with 10.5 years to maturity, a YTM of 7.1 percent, a par value of $1,000, and a current price of $1,051. The bonds make semiannual payments.

Subjects