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31 May, 06:08

A bond has a $1,000 face value, a market price of $1,045, and pays interest payments of $74.50 every year. what is the coupon rate?

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  1. 31 May, 08:33
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    The coupon rate is the interest paid by the bond on its term. The coupon rate can be computed as interest paid divided by the face value. Thus, coupon rate can be computed using this formula,

    coupon rate = interest paid/bond face value

    where

    interest paid = $74.5

    bond face value = $1000

    coupon rate = 7.45%
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