A bond has a par value of $1,000, a current yield of 8.27 percent, and semiannual...

A bond has a par value of $1,000, a current yield of 8.27 percent, and semiannual coupon payments. The bond is quoted at 104.29. What is the coupon rate of the bond?

Solutions

Expert Solution

Current yield of bond = Annual coupon/Current price of bond

Current price of bond = 104.29% * $1000 = $1,042.90

8.27% = Annual coupon/$1,042.90

Annual Coupon = 8.27% * $1,042.90

Annual coupon = $86.25

Annual Coupon rate = $86.25/$1000 = 8.62%

jeff jeffy answered 1 year ago

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