Question

1. Suppose a five-year, $ 1,000 bond with annual coupons has a price of $ 903.98 and a yield to maturity of 5.7 %. What is the bond's coupon rate? The bond's coupon rate is ........... % ( Round to three decimal places.)

2. Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1,000 and a coupon rate of 7.7 % (annual payments). The yield to maturity on this bond when it was issued was 6.2 %.What was the price of this bond when it was issued?

When it was issued, the price of the bond was $.......... (Round to the nearest cent.)

Answer 1

1)

fix X =PMT(B6,B4,B7,B1) B10 В 1 Face value (FV) 2 Number of compounding periods per year 3 Number of years to maturity Number of compounding periods till maturity 4 (NPER) 5 Yield to maturity 6 Yield to maturity (RATE) 7 Bond price (PV) 8 Interest payment (PMT) $ 1,000 1 5 5 5.7% 5.7% $ (903.98) PMT(RATE,NPER,PV,FV) 10 Coupon payment (PMT) 34.39 11 Coupon rate [Coupon payment x 12 Compoundings per year $FV] 3.44%

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