O'Brien Ltd.'s outstanding bonds have a $1,000 par value,and they mature in 25 years.Their nominal annual,not semiannual yield to maturity is 9.25%,they pay interest semiannually,and they sell at a price of $700.What is the bond's nominal coupon interest rate?

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The bond's nominal coupon interest rate can be calculated using the formula for the present value of a bond, which is the sum of the present value of the annuity (coupon payments) and the present value of the lump sum (face value). Given the bond's price ($700), yield to maturity (9.25% annually, or 4.625% semiannually since payments are semiannual), and maturity (25 years, or 50 periods semiannually), we can solve for the coupon payment. The correct answer, 6.15%, represents the annual coupon rate that, when applied to the bond's face value ($1,000), results in semiannual payments that justify the bond's current price under the given yield to maturity.