Question

Problem 6-33 Coupon Rates (LO 2] You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2019. The bonds have a par value of $2,000 and semiannual coupons. Company (Ticker) Coupon Xenon, Inc. (XIC) 6.400 Kenny Corp. (KCC) 7.220 Williams Co. (WICO) ?? Last Price 94.283 Maturity Jan 15, 2033 Jan 15, 2030 Jan 15, 2036 Last Yield ?? 6.22 6.47 EST $ Vol (000's) 57,372 48,951 43,812 ?? 96.835 What is the coupon rate for the Williams Co. bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Coupon rate Coupon rate %

Answer 1

Bond Par Value = $2,000

Bond Price = (96.835/100)2,000 = $1,936.70

Time Period = 17 years

YTM = 6.47%

Calculating Semi-Annual Coupon,

Using TVM Calculation,

PMT = [PV = -1,936.70, FV = 2,000, N = 34, I = 0.0647/2]

PMT = $61.60

Coupon Rate = 2(61.60)/2,000

Coupon Rate = 6.160%