Rhiannon Corporation has bonds on the market with 11.5 years to maturity, a YTM of...
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Rhiannon Corporation has bonds on the market with 11.5 years to maturity, a YTM of 7.3 percent, and a current price of $1,080. The bonds make semi-annual payments. What must the coupon rate be on these bonds?
How is the C = $41.70 solved? just using a calculator doing it by hand, not on excel
4. Here we need to find the coupon rate of the bond. All we need to do is to set up the bond pricing equation and solve for the coupon payment as follows: P = $ 1,080 = a PVI FA3.65%.23) + $1 ,000( PVI F3.65%.23) Solving for the coupon payment, we get: C = $41 .70 Since this is the semiannual payment, the annual coupon pa yment is: 2 x $41.70 $83.40 And the coupon rate is the annual coupon payment divided by par value, so: Coupon rate 8340/ $1,000 Coupon rate-.0834, or 8.34%
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