What is the coupon rate for a bond with 3 years until maturity, a price of $1,053.46, and a yield to maturity of 6%? Interest is paid annually.

Coupon rate is 8%

Explanation:

We can ascertain the coupon rate by first of all determine the amount of coupon with pmt excel function below:

=pmt (rate, nper,-pv, fv)

rate is yield to maturity of 6%

nper is the number of coupons before maturity i. e 3 annual coupons in three years

pv is the current market price of $1,053.46

fv is the par value of $1,000

=pmt (6%,3,-1053.46,1000) = 80

Coupon rate=pmt/face value=80/1000=8%