Bond Yield and Coupon Rate
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1. Bond Yields. A bond with par value $1,000 has a current yield of 7.5 percent and a coupon rate of 8 percent. What is the bond's price?
2. Coupon Rate. General Matter's outstanding bond issue has a coupon rate of 10 percent and a current yield of 9.6 percent, and it sells at a yield to maturity of 9.25 percent. The firm wishes to issue additional bonds to the public at par value. What coupon rate must the new bonds offer in order to sell at par?
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Solution Summary
The solution explains how to calculate the yield on a bond and the coupon rate on the bond.
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1. The current yield = Interest/Price. The coupon rate is 8% and the par value is $1000. The coupon amount is $80. ...
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