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What is the amount of the annual coupon payment for a bond that has six years until maturity, sells for $1,050, and has a yield to maturity of 9
What is the amount of the annual coupon payment for a bond that has six years until maturity, sells for $1,050, and has a yield to maturity of 9.37%?
Expert Solution
We can calculate the annual coupon payment by using the following formula in excel:-
=pmt(rate,nper,-pv,fv)
Here,
Pmt = Annual coupon payment
Rate = 9.37%
Nper = 6 periods
PV = $1,050
FV = $1,000
Substituting the values in formula:
= pmt(9.37%,6,-1050,1000)
= $104.97
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