Gugenheim offers a 15-year coupon bond with semiannual payments.The yield to maturity is 5.85 percent and the bonds sell at 94 percent of par.What is the coupon rate?

Name: Gugenheim offers a 15-year coupon bond with semiannual payments.The yield to maturity is 5.85 percent and the bonds sell at 94 percent of par.What is the coupon rate?
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Question

Quizplus · Accepted Answer

.94 × $1,000 = C × ({1 - 1/[1 + (.0585/2)]^{15 × 2}}/(.0585/2))+ {$1,000/[1 + (.0585/2)]^{15 × 2}}C = $26.22 Coupon rate = ($26.22 × 2)/$1,000 = .0524,or 5.24%

Gugenheim Offers a 15-Year Coupon Bond with Semiannual Payments