Ask Question
8 May, 21:40

McConnell Corporation has bonds on the market with 15.5 years to maturity, a YTM of 6.2 percent, a par value of $1,000, and a current price of $1,039. The bonds make semiannual payments.

What must the coupon rate be on these bonds?

+2
Answers (1)
  1. 8 May, 22:08
    0
    Coupon rate is 6.4%

    Explanation:

    The coupon payment on a bond can be computed from a formula of current price of a bond

    current price of a bond=coupon amount/yield to maturity

    coupon amount=current price * yield to maturity

    current price is $1039

    yield to maturity is 6.2%

    coupon rate = $1039*6.2%

    =$64.42

    Coupon rate=coupon amount/par value of bond

    coupon amount $64.42

    par value of bond=$1000

    coupon rate = $64.42/$1000

    =6.4%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “McConnell Corporation has bonds on the market with 15.5 years to maturity, a YTM of 6.2 percent, a par value of $1,000, and a current price ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers