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1 February, 09:34

4 - You are purchasing a 20-year, semi-annual bond with a current market price of $973.64. If the yield to maturity is 8.68 percent and the face value is $1,000, what must the coupon payment be on the bond?

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  1. 1 February, 13:30
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    Annual coupon payment = $84

    Coupon payment in percentage = 8.4%

    Explanation:

    Coupon payment amount is calculated using the PMT function in excel as follows:

    =PMT (8.68%/2,20*2,-973.64,1000)

    =42

    Annual coupon payment = 42*2 = $84

    Coupon payment in percentage = 84/1000 = 8.4%
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Home » Business » 4 - You are purchasing a 20-year, semi-annual bond with a current market price of $973.64. If the yield to maturity is 8.68 percent and the face value is $1,000, what must the coupon payment be on the bond?
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