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Exactly, eight years ago, Milfred, Inc. issued some $15,000 par value bonds. When issued, the bonds...

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Finance

Exactly, eight years ago, Milfred, Inc. issued some $15,000 parvalue bonds. When issued, the bonds had a life of 30 years, paidcoupon interest semiannually, and sold at par value. Today, thebonds sell for a price equal to 92 percent of par value (i.e., 92%of $15,000) and the yield to maturity on these bonds is 7.1%. Whatis the coupon rate of these bonds?

Answer & Explanation Solved by verified expert
3.6 Ratings (487 Votes)
Let the coupon rate be x Thus semiannual coupon payments x100215000 75x Now n 3082 44 and YTM 71 annual or 712 355 semiannual Thus the present value of all future cash flows discounted using the YTM of 355 semiannual    See Answer
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