Dma corporation has bonds on the market with 19.5 years to maturity, a ytm of 6.6 percent, and a current price of $1,043. the bonds make semiannual payments and have a par value of $1,000. what must the coupon rate be on these bonds? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places,

e. g., 32.16.)

Question

Business

Grayson Delacruz

14 March, 17:41

Dma corporation has bonds on the market with 19.5 years to maturity, a ytm of 6.6 percent, and a current price of $1,043. the bonds make semiannual payments and have a par value of $1,000. what must the coupon rate be on these bonds? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places,

e. g., 32.16.)

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Answers (1)

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Levi Mcgee · Answer 1

Given:

bonds on the market with 19.5 years to maturity

a yield to maturity of 6.6%,

current price of $1,043

face value of $1,000

YTM = Coupon payment / current price

6.6% = Coupon payment / 1,043

6.6% * 1,043 = Coupon payment

68.838 = coupon payment

Coupon rate = Coupon payment / Face Value

Coupon rate = 68.838 / 1,000

Coupon rate = 0.068838 or 6.88%

The coupon rate of DMA Corporation's bonds is 6.88%.

Regardless of its price in the market, each bond will have 68.838 annual interest payment or 34.419 semi annual payments.