148k views
2 votes
Gabriele enterprises has bonds on the market making annual payments, with seven years to maturity, a par value of 1000, and selling for 962. At this price, this price, the bonds yield 6.6 percent.

What must the coupon rate be on the bonds?

User MeetMrMet
by
7.6k points

1 Answer

5 votes

Answer:

The answer is =5.91%

Step-by-step explanation:

N(Number of periods) = 7 years

I/Y(Yield to maturity) = 6.6percent

PV(present value or market price) = $962

PMT( coupon payment) = ?

FV( Future value or par value) = $1,000.

We are using a Financial calculator for this.

N= 7; I/Y = 6.6; PV = -962; FV= $1,000; CPT PMT= $59.05

Therefore, the coupon rate of the bond is of the bond is $59.05/1000

=5.91%

User Webbi
by
8.1k points