5. A company has a bond on the market with 15 years to maturity, a YTM...

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Answer 1

Answer #1

The coupon rate can be calculated with the help of below expression:

1-(1+ Face value Bond price (Face value x Coupon rate)x| (1-9-1} (1+) Px1(1+F1 Here i is yield to maturity Pis number of paym

Substitute $1,000 for face value, $1,050 for bond price, 2 for P, 15 for n and 0.055 for i,

(S1,000x Coupon rate) $1,000 + -15 1-(1+0.055 X $1,050 15 (1+0.055) 2x1 (1+0.055)-1 0.552067 $1,000 $1,050 (S1,000x Coupon ra

Thus, the annual coupon rate will be 5.91%.

Answer 2

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