Question

In: Finance

Gabriele Enterprises has bonds on the market making annualpayments, with 15 years to maturity, a...

Gabriele Enterprises has bonds on the market making annual payments, with 15 years to maturity, a par value of $1,000, and selling for $840. At this price, the bonds yield 8.1 percent. What must the coupon rate be on the bonds? Multiple Choice • 6.32% • 8.10% • 12.44% • 7.40% • 6.22%

Solutions

Expert Solution

Value of Bond =

Where r is the discounting rate of a compounding period i.e. 8.1%

And n is the no of Compounding periods 15 years

Coupon ?

840 =

840 = Coupon * 8.50746159604 + 310.89561072

Coupon = 840 - 310.89561072 / 8.50746159604

Coupon = 62.20

Coupon Rate = 62.20 / 1000

Coupon Rate = 6.22%

Option 5 is correct.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Gabriele Enterprises has bonds on the market making annualpayments, with 15 years to maturity, a...
Gabriele Enterprises has bonds on the market making annual payments, with 15 years to maturity, a par value of $1,000, and selling for $840. At this price, the bonds yield 8.1 percent. What must the coupon rate be on the bonds? Multiple Choice • 6.32% • 8.10% • 12.44% • 7.40% • 6.22%
Gabriele Enterprises has bonds on the market making annualpayments, with 10 years to maturity, a...
Gabriele Enterprises has bonds on the market making annual payments, with 10 years to maturity, a par value of $1,000, and selling for $910. At this price, the bonds yield 12 percent. What must the coupon rate be on the bonds?
ABC Enterprises has bonds on the market making annual payments, with seven years to maturity, and...
ABC Enterprises has bonds on the market making annual payments, with seven years to maturity, and selling for $1120. At this price, the yield to maturity is 11%. What must the coupon rate % ? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) (Omit % sign in your response.)
ABC Enterprises has bonds on the market making annual payments, with 20 years to maturity, and...
ABC Enterprises has bonds on the market making annual payments, with 20 years to maturity, and selling for $850. At this price, the yield to maturity is 3.5%. What must the coupon rate % ? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) (Omit % sign in your response.)
Gabriele Enterprises has bonds on the market making annual payments, with 6 years to maturity, a...
Gabriele Enterprises has bonds on the market making annual payments, with 6 years to maturity, a par value of $1,000, and selling for $860. At this price, the bonds yield 8.5 percent. What must the coupon rate be on the bonds?
Kiss the Sky Enterprises has bonds on the market making annual payments, with 15 years to...
Kiss the Sky Enterprises has bonds on the market making annual payments, with 15 years to maturity, and selling for $950. At this price, the bonds yield 10.0 percent. What must the coupon rate be on the bonds?
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%
ABC Inc. has bonds on the market with 15 years to maturity, a YTM of 7%...
ABC Inc. has bonds on the market with 15 years to maturity, a YTM of 7% and a current price of $950.  The bond makes semiannual payments.  What must the coupon rate be on these bonds?
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.)
Kiss the Sky Enterprises has bonds on the market making annual payments, with 9 years to...
Kiss the Sky Enterprises has bonds on the market making annual payments, with 9 years to maturity, and selling for $940. At this price, the bonds yield 7.4 percent. What must the coupon rate be on the bonds?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT