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Suppose a -year bond with annual coupons has a price of ______ and a yield to maturity of ______. What is the bond's coupon rate?

User Rahshawn
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1 Answer

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Final answer:

The bond's coupon rate cannot be calculated without knowing the bond's price.

Step-by-step explanation:

The bond's coupon rate can be calculated by dividing the annual coupon payment by the bond's price and multiplying by 100%. Let's use the example given:

Suppose Ford Motor Company issues a five-year bond with a face value of $5,000 that pays an annual coupon payment of $150. To calculate the coupon rate, we divide the annual coupon payment by the bond's price:

Coupon rate = (Annual coupon payment / Bond's price) x 100%

Since we're not given the bond's price, we cannot accurately calculate the coupon rate.

User Neek
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