Question

1. A bond has a par value of $1,000, a current yield of 8.15 percent, and semiannual coupon payments. The bond is quoted at 103.51. What is the coupon rate of the bond?

2. Kasey Corp. has a bond outstanding with a coupon rate of 5.94 percent and semiannual payments. The bond has a yield to maturity of 5.1 percent, a par value of $2,000, and matures in 20 years. What is the quoted price of the bond?

3. A bond with a current yield of 6.64 percent is quoted at 96.171. What is the coupon rate of the bond:?

4. Footsteps Co. has a bond outstanding with a coupon rate of 5.7 percent and annual payments. The bond currently sells for $927.87, matures in 13 years, and has a par value of $1,000. What is the YTM of the bond?

Answer 1

1)

Current yield = Annual coupon payments/Bond price

8.15% = Annual coupon payments/$1,035.10

Annual coupon payments = $84.36

Hence, coupon rate is 8.45% ($84.36/$1,000)

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