A bond has a coupon payment of $22 every 6-months. It is trading at 98.6, is rated BBB, and has 8 years until maturity. What is its annual coupon rate?
A bond has a coupon payment of $22 every 6-months. It is trading at 98.6, is rated BBB, and has 8 years until maturity. What is its annual coupon rate?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A bond has a coupon payment of $22 every 6-months. It is trading at 98.6, is rated BBB, and has 8
years until maturity.
What is its annual coupon rate?
Expert Solution
Step 1
Bonds are the liabilities of the company which is issued to raise the funds required to finance the capital requirement of the company. The company needs to pay interest expenses against the bonds financing.
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