Respuesta :
A $10,000 face value treasury bond is quoted at a price of 102.311 with a current yield of 4.28 percent The coupon rate is 4.92%.
How much is a coupon rate?
The annual income an owner might anticipate while owning a specific bond is known as the coupon rate. The calculation is done by dividing the total of the annual coupon payment by the par value, and it is established at the time the bond is issued. A bond's return to maturity and coupon rate are equal at the time of purchase.
Calculation:
The coupon payment, which would then be used to compute the coupon rate as necessary, can be calculated using the current yield formula:
current yield=coupon payment/current market price
current yield=4.28%
coupon payment=unknown
current market price=102.311%*$10,000
current market price=$10,231.1
4.87%=coupon payment/$10,123.1
coupon payment=$10,123.1 *4.87%
coupon payment=$492.99497
coupon rate=coupon payment/face value
coupon rate=$492.99497 /$10,000
coupon rate=4.92%
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