Final answer:
The coupon rate of the bond is closest to 5.80%. This is calculated by first determining the annual coupon payment using the current yield and bond price, then dividing the annual payment by the face value and multiplying by 100 to find the percentage.
Step-by-step explanation:
The student's question is asking us to determine the coupon rate of a bond that has a current yield of 6.15% and is quoted for 94.253. The coupon rate is the annual interest rate paid by the bond's issuer based on the bond's face value. To calculate the coupon rate, we can set up the following relationship:
Current Yield = (Annual Coupon Payment / Price) * 100
We know the current yield is 6.15% and the bond price is 94.253, so we can rearrange the formula to solve for the Annual Coupon Payment:
6.15 = (Annual Coupon Payment / 94.253) * 100
Annual Coupon Payment = (6.15 / 100) * 94.253
Annual Coupon Payment = 5.7912
The annual coupon payment refers to the dollar amount, usually a percentage of the bond's face value (which is generally $1,000 for corporate bonds). Therefore, the coupon rate is the percentage that results in this annual payment based on the face value:
Coupon Rate = (Annual Coupon Payment / Face Value) * 100
Coupon Rate = (5.7912 / 1000) * 100
Coupon Rate = 5.7912%
Therefore, the coupon rate of the bond is closest to the given option e. 5.80%.