Question

A coupon bond with 12 years remaining to maturity has a yield to maturity of 6% and a face value of $1,000 that is returned to the bondholder at maturity. The bond has a current price of $820.

Which of the following comes closest to the coupon payment of this bond?

A) $32.98 B) $38.53 C) $40.92 D) $43.30 E) $45.69

Answer 1

B) $38.53

Step-by-step explanation:

We use the PMT Formula for this question. The calculation is presented on the attachment below:

Data provided in the question

Present value = $820

Future value = $1,000

Rate of interest = 6%

NPER = 12 years

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the coupon payment of this bond is $38.53