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bond's coupon rate

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1. Suppose a five year, $1000 bond with annual coupon has a price of $900 and yield to maturity of 6%. What is the bond's coupon rate?

2. Summit Systems will pay a dividend of $1.50 this year. If you expect Summit's dividend to row by 6% per year. What is its price per share if its equity cost of capital is 11%?

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1. Suppose a five year, $1000 bond with annual coupon has a price of $900 and yield to maturity of 6%. What is the bond's coupon rate?

First Here we have to find the value of Annuity

I Price= Present ...

Solution Summary

Response helps in explaining of computing the bond's coupon rate

$2.19
See Also This Related BrainMass Solution

Skitman Corp issued bonds: What is YTM? The coupon rate? The required return? Risk?

1. Skitman Corp. issued 12-year bonds 2 years ago at a coupon rate of 9.2 percent. The bonds make semiannual payments. If these bonds currently sell for 104 percent of par value, what is the YTM?

2. Interpreting Bond Yields: Is the yield to maturity on a bond the same thing as the required return? Is YTM the same thing as the coupon rate? Suppose today a 10 percent coupon bond sells at par. Two years from now, the required return on the same bond is 8 percent. What is the coupon rate on the bond then? The YTM?

3. Interest Rate Risk: Bond J is a 4 percent coupon bond. Bond K is a 12 percent coupon bond. Both bonds have eight years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? What if rates suddenly fall by 2 percent instead? What does this problem tell you about the interest rate risk of lower-coupon bonds?

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