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4- You are purchasing a 20-year, semi-annual bond with a current market price of $973.64. If the yield to maturity is 8.68 percent and the face value is $1,000, what must the coupon payment be on the bond?
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4- You are purchasing a 20-year, semi-annual bond with a current market price of $973.64. If the yield to maturity is 8.68 percent and the face value is $1,000, what must the coupon payment be on the bond?

User Huang Jinlong
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1 Answer

5 votes

Answer:

Annual coupon payment = $84

Coupon payment in percentage = 8.4%

Step-by-step explanation:

Coupon payment amount is calculated using the PMT function in excel as follows:

=PMT(8.68%/2,20*2,-973.64,1000)

=42

Annual coupon payment =42*2 = $84

Coupon payment in percentage = 84/1000 = 8.4%

User Kenodoggy
by
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