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Dma corporation has bonds on the market with 16.5 years to maturity, a ytm of 7.7 percent, and a current price of $1,065. the bonds make semiannual payments and have a par value of $1,000. what must the coupon rate be on these bonds?

Respuesta :

meerkat18
With face value equal to $ 1000, present value equal to $ 1,065, we get nper = 16.5 * 2 = 33. Rate(ytm) is equal to 7.7%/2 = 3.85%.PMT (coupon payment)  = $ 42.01.Coupon rate = (42.01 / 1000) = 4.20%.Therefore, the annual coupon rate is equal to 4.2 * 2 which equates to 8.40%

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