A 6-year Circular File bond with face value $1,000 pays interest once a year of $80 and

Question:

A 6-year Circular File bond with face value $1,000 pays interest once a year of $80 and sells for $950.

a. What is its coupon rate?

b. What is its yield to maturity?

c. If Circular wants to issue a new 6-year bond at face value, what coupon rate must the bond offer?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

Fantastic news! We've Found the answer you've been seeking!