Question

Bryceton, Inc. has bonds on the market with 13 years to maturity, a yield-to-maturity of 9.2 percent, and a current price of $802.30. The bonds make semiannual payments. What is the coupon rate?

Answer 1

The bond's coupon rate is 4.6%.

Step-by-step explanation:

The coupon rate can be calculated by dividing the annual coupon payment by the bond's face value. In this case, the bond has a yield-to-maturity of 9.2% and a current price of $802.30. Since the bond makes semiannual payments, the annual coupon payment can be determined by dividing the yield-to-maturity by 2 and multiplying it by the face value of the bond:

Coupon rate = (YTM / 2) * Face value

Plugging in the given values, we get:

Coupon rate = (0.092 / 2) * $1000 = $46

Therefore, the coupon rate of the bond is $46 or 4.6%.