Assume Walmart issued $1,000 10-year bonds. The bonds sold for $924 and pay interest semiannually. The required rate of return (semi-annual effective rate) for the bonds is .03. What is the bond’s coupon rate, reported as an APR compounded semi-annually? Instruction: Round to three decimal places. E.g., if your answer is 0.0106465 or 1.06465%, you should type ONLY the number .011, neither 0.0106465, 0.0106, nor 1.065
Assume Walmart issued $1,000 10-year bonds. The bonds sold for $924 and pay interest semiannually. The required rate of return (semi-annual effective rate) for the bonds is .03. What is the bond’s coupon rate, reported as an APR compounded semi-annually? Instruction: Round to three decimal places. E.g., if your answer is 0.0106465 or 1.06465%, you should type ONLY the number .011, neither 0.0106465, 0.0106, nor 1.065
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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Question
Assume Walmart issued $1,000 10-year bonds. The bonds sold for $924 and pay interest semiannually. The required
Instruction: Round to three decimal places. E.g., if your answer is 0.0106465 or 1.06465%, you should type ONLY the number .011, neither 0.0106465, 0.0106, nor 1.065.
Expert Solution
Step 1
Coupon Rate:
- It represents the rate at which the interest payments are made to the bondholder by the issuer.
- It is estimated by taking the division of annual coupon payment by the bond's par value.
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