Finn Corporation has bonds on the market with 11.5 years to maturity, a yield to maturity...
Finn Corporation has bonds on the market with 11.5 years to maturity, a yield to maturity of 9.6% and a current price of $865. The bond makes semi annual payments. What is the coupon rate on these bonds?
Homework Answers
| Step-1: | Calculation of coupon payment | |||
| Coupon Payment | =pmt(rate,nper,pv,fv)*2 | |||
| = $ 76.36 | ||||
| Where, | ||||
| rate | = | 0.048 | ||
| nper | = | 23 | ||
| pv | = | $ -865.00 | ||
| fv | = | $ 1,000.00 | ||
| Step-2: | Calculation of coupon rate | |||
| Coupon rate | = | Annual coupon payment | / | Face Value |
| = | $ 76.36 | / | $ 1,000.00 | |
| = | 7.64% |
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