A sixyear semiannual coupon bond is selling for 99138 The bo

A six-year, semiannual coupon bond is selling for $991.38. The bond has a face value of $1,000 and a yield to maturity of 9.19 percent. What is the coupon rate? All work must be shown.

Solution

                    K =Nx2         
BOND PRICE= [(Semi-annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^(Nx2)
                   k=1

                    K= 6x2          
991.38 = [(C*1000/(100*2))/(1 + 9.19/200)^k]     +   1000/(1 + 9.19/200)^6x2
                   k=1

C = 9%