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14 April, 12:22

A $1,000 face value bond is currently quoted at 100.8. the bond pays semiannual payments of $22.50 each and matures in six years. what is the coupon rate?

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  1. 14 April, 14:54
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    We are given with

    F = 1000

    b = 22.50

    P = 100.8

    We use the formula to get the coupon rate

    b = Fib

    Substituting the given values

    22.50 = 1000 ib

    ib = 0.0255 or 2.25%

    The coupon rate is 2.25%
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