Homework Question Finance

Business & Finance
Tutor: None Selected Time limit: 1 Day

Beam Inc. bonds are trading today for $1472.45. The bond currently has 19 years until maturity and has a yield of maturity of 2.38%. The bond pays annual coupons and the next coupon is due in 1 year. What is the coupon rate of the bond?

Jul 7th, 2015

Thank you for the opportunity to help you with your question!

let the coupon rate be x, 

PV = 1000*x (sum of 1/1.0238^i, i from 1 to 19) +1000/1.0238^19

=1000x*15.1426+639.61

=1472.45

15142.6x = 832.84

x= 5.50%


Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 7th, 2015

States that answer is incorrect


Jul 7th, 2015

sorry you were right

Jul 7th, 2015

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