A 10-year Circular File bond pays interest of $55 annually and sells for $966. What are its coupon rate and yield to maturity?
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If the par value is $10 then the coupon rate is $55/$10 = 5.5%.
Assuming that the bond payments occur annually and the first interest payment occurs exactly one year from the purchase date, using the yield to maturity calculator cited below the yield to maturity is 5.962%.
Source(s): http://www.bargainbininvesting.com/tools/yield-to-…