Question

A 10-year semi-annual coupon bond has a par value of $1,000 and a yield to maturity (YTM) of 8%. The bond is currently trading at $1.050. What is the coupon rate on the bond?

Please round your answer to four decimal places.

Answer 1

The coupon is $87.36 per year.

Explanation:

Price = ( Coupon × 1 − ( 1 + r ) − n r ) + Par Value ( 1 + r ) n

Using this formula you should get $87.36