| View Question |
|
|
 | ||
|
| Subject:
coupon rate
Category: Reference, Education and News Asked by: darlinnikki-ga List Price: $2.00 |
Posted:
04 Aug 2005 10:15 PDT
Expires: 03 Sep 2005 10:15 PDT Question ID: 551690 |
a 10-year treasurey bond is issued with a face value of $1,000, paying interest of $60 a year. If market yields increase shortly after the T-bond is issued, what happens to the bond's: 1. coupon rate 2. price 3. yield to maturity |
| ||
|
| There is no answer at this time. |
| ||
|
| Subject:
Re: coupon rate
From: mohamed_elkamony-ga on 06 Aug 2005 21:46 PDT |
a) The coupon rate will stay the same (6%). b) The price of the bond will decrease, as its yield maturity (YTM) will increase causing the bond to sell at a discount. c) YTM will increase. Feel free to ask any further questions. Regards, Mohamed El-Kamony |
| Subject:
Re: coupon rate
From: darlinnikki-ga on 07 Aug 2005 16:50 PDT |
Mohamed - Do you know the calculation used to get the coupon rate? Thanks! Tia |
| Subject:
Re: coupon rate
From: mohamed_elkamony-ga on 12 Aug 2005 00:50 PDT |
Sure,
Coupon Rate = [Annual Coupon Interest / Bond's Face Value]
So in this case:
Annual Coupon Interest= $60 & Face value = $1000
Coupon Rate = [60 /1000 ] x 100 ( for %)
= 6%
Regards,
Mohamed El-Kamony |
| Subject:
Re: coupon rate
From: browneyes1-ga on 21 Sep 2005 14:16 PDT |
With the given information. How do you calcuolate the price of the bond and the yield to maturity? |
| Subject:
Re: coupon rate
From: mohamed_elkamony-ga on 09 Nov 2005 15:18 PST |
You can't. One variable is missing.. You must have the purchase price of the bond in order to calculate its YTM. Then again you must have the bond's YTM if you want to calculate its intrinsic value. Regards, Mohamed El-Kamony |
If you feel that you have found inappropriate content, please let us know by emailing us at answers-support@google.com with the question ID listed above. Thank you. |
| Search Google Answers for |
| Google Home - Answers FAQ - Terms of Service - Privacy Policy |