Question

Myriad Solutions, Incorporated issued 10-year bonds, dated January 1, with a face amount of 520 million on January 1, 2024, for460,353,920. What is the coupon rate of the bonds?

1) 2.5%
2) 3.0%
3) 3.5%
4) 4.0%

Answer 1

To calculate the coupon rate of the bond, divide the assumed annual coupon payment 1 million by the face value of the bond and multiply by 100. The calculated coupon rate in this case is 0.1923%, which does not match any of the provided options.

Step-by-step explanation:

The coupon rate of the bonds issued by Myriad Solutions, Incorporated can be calculated by taking the annual coupon payment amount and dividing it by the face value of the bonds.

The annual coupon payment is $1 million (assumed) and the face amount (face value) of the bonds is $520 million (given), we can find the coupon rate by using the following formula:

Coupon Rate = (Annual Coupon Payment / Face Value of the Bond) × 100

Substituting the given values:

Coupon Rate = ($1 million / $520 million) × 100 = 0.1923%

So, none of the given options are correct.