Ask Question
14 September, 18:07

Siamtop Inc. offers a 15-year coupon bond with semiannual payments. The yield to maturity is 7.34 percent and the bonds sell at 96 percent of par. What is the coupon rate?

A. 6.90 percent

B. 5.80 percent

C. 6.40 percent

D. 7.50 percent

+4
Answers (1)
  1. 14 September, 18:34
    0
    A. 6.90 percent

    Explanation:

    Yield to maturity = [Annual Interest + (Par value - Market Value) / no of year to Maturity ] / [ (Par value - Market Value) / 2]

    0.0734 = [ Annual Interest + (100% - 96%) / 15 ] / [ (100% + 98%) / 2]

    0.0734 = [ Annual Interest + (1.00 - 0.96) / 15 ] / [ (1.00 + 0.98) / 2]

    0.0734 = [ Annual Interest + (0.04) / 15 ] / [ 1.98 / 2]

    0.0734 = [ Annual Interest + 0.0027 ] / 0.99

    0.0734 x 0.99 = Annual Interest + 0.0027

    0.072666 - 0.0027 = Annual Interest

    Annual Interest = 0.069966 = 7% (Rounded off)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Siamtop Inc. offers a 15-year coupon bond with semiannual payments. The yield to maturity is 7.34 percent and the bonds sell at 96 percent ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers