OBrien Ltds outstanding bonds have a $1,000 par value, and they mature

QUESTION

OBrien Ltds outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $975. What is the bonds nominal coupon interest rate?
Par Value (Or) Face Value of the bond = $1,000Number of years to Maturity of the bond = 25 yearsNominal Yield to Maturity of the bond = 9.25%Interest paid semi-annuallyCurrent Market Price of the bond = $975Nominal Coupon Interset Rate = ? Calculating Nominal Coupon Interest Rate of the bond : (Using Ms-Excel “PMT” Function ): Nominal Yield to Maturity of the bond (Rate) [9.25%/2] 4.63% Number of years to Maturity of the bond (Nper)

25*2 Present Value of the bond (PV) -975 Par Value (or) Face value (or) Future Value of the bond (FV) 1000 Semi-Annual Coupon Payment (PMT) $44.96 Annual Coupon Payment (PMT) [$44.96 * 2] $89.92 Annual Coupon Interest Rate [$89.92 / $1000] 8.99% Annual Nominal Coupon Interest Rate = 8.99%

ANSWER:

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