1.) Volbeat Co. has bonds on the market with 10.5 years to maturity, a YTM of...

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1.) Volbeat Co. has bonds on the market with 10.5 years tomaturity, a YTM of 6.2%, a par value of $1,000, and a current priceof $945. The bonds make semiannual payments. What must the couponrate be on the bonds?
2.) If Treasury bills are currently paying 4.5% and theinflation rate is 1.6%, what is the approximate real rate ofinterest? The exact real rate?

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4.4 Ratings (574 Votes)

1 Par value 1000 Current price 945 Years to maturity 105 years Yield to maturity 62Since the bond pays coupon semi annually thereforeNo of half years to maturity 2 x years to maturity 2 x See Answer

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1.) Volbeat Co. has bonds on the market with 10.5 years tomaturity, a YTM of 6.2%, a par value of $1,000, and a current priceof $945. The bonds make semiannual payments. What must the couponrate be on the bonds?2.) If Treasury bills are currently paying 4.5% and theinflation rate is 1.6%, what is the approximate real rate ofinterest? The exact real rate?