There is a semiannual coupon bond with the following info. What is this bond’s coupon rate? (Show Work)               Par= $5,000             Price= $4,800             YTM=6%             5 years until maturity   Note: YTM and coupon rate are always annual.

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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  1. There is a semiannual coupon bond with the following info. What is this bond’s coupon rate? (Show Work)

 

            Par= $5,000

            Price= $4,800

            YTM=6%

            5 years until maturity

 

Note: YTM and coupon rate are always annual.

 

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The coupon rate of interest is different from the yield to maturity. The YTM represents the actual rate f return provided by a bond assuming the bond is held till maturity who makes all interest and principal payments. The coupon rate is the interest rate that a bond pays. The coupon rate is the fixed interest rate on a band.

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