a 6-year maturity bond has a price that is 106

Finance Dec 19, 2020

a 6-year maturity bond has a price that is 106.19% of its face value, and semiannual coupon payments. the yield to maturity of the bond is 4.80%. the coupon rate is closest to

Expert Solution

Use PMT function in EXCEL to find the semi-annual coupon

=PMT(rate,nper,pv,fv,type)

rate=4.8%/2=2.4%

nper=6 years*2=12

pv=106.19%*face value=106.19%*1000=1061.9

fv=1000

=PMT(2.4%,12,-1061.9,1000,0)=30

annual coupon=2*30=60

coupon rate=annual coupon/face value=60/1000=6%

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