M Co. has bonds on the market making annual payments, with 11 years to maturity, and selling for $963.00. At this price, the bonds yield 8%. What must the coupon rate be on M's bonds?
Answer and Explanation:
Bond Price is given as:
Bond Price = $963.00
M = Maturity amount = $1,000.00
n = Number of years to maturity = 11
i = Yield = 8% = 0.08
Coupon = $74.82
Coupon rate = 74.82 / 1000 x 100 = 7.48%
Become a member and unlock all Study Answers
Try it risk-free for 30 days!Try it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Finance 301: Corporate FinanceChapter 7 / Lesson 6
Related to this Question
Explore our homework questions and answer library
Our tutors are standing by
Ask a study question and one of our experts will send you an answer within hours.
To ask a site support question, click here
Your question has been submitted!
When your answer is ready, it will appear on your Dashboard.