16 -1: (Assume par value of the bonds is $1000 unless otherwise specified.)
The Pioneer Petroleum Corporation has a bond outstanding with an $85 annual interest payment, a market price of $800, and a maturity date in five years. Find the following:
a. The coupon rate.
b. The current rate.
c. The approximate yield to maturity.
a) Coupon Rate = Coupon payment / par value = $85/$1000 = 8.5%
b) Current Rate = Coupon Rate / market price = $85/800 = 10.625%
c) The ...
The solution shows the calculations and the answers to the problems about bonds for Pioneer Petroleum.