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Date Posted: 09:40:39 04/10/01 Tue
Author: Brian
Subject: Re: Chapter 10 Bond problem
In reply to: Cheryl L. Saunders 's message, "Chapter 10 Bond problem" on 08:34:36 04/09/01 Mon

>If a bond is selling at $940 and has 20 years to
>maturity. Coupon payment annually and the market rate
>of interest is 11 percent. What is the coupon rate
>for this bond? Please tell me how to solve for
>answer 10.2465 percent. Thanks.


On the BAII Plus, use the TVM keys. PV= -940 FV= 1000 N=20 I/Y=11 CPT for PMT. PMT=102.465

To find the coupon rate, multiply the payment amount by the number of coupon payments per year. Divide the answer by the $1,000 par value of the bond, and you get .102465, or 10.2465%

Hope that helps! =)

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