[Seana]

:eek: I have to find the coupon rate on a bond but every formula I find requires the coupon rate to already be configured. How do I work backwards to get what I need?

Example problem - Samantha's bonds sell for $1065.15. The bond life is 9 years and the yield to maturity is 7 percent. What must be the coupon rate on the bonds?

To look at it - it seems so simple. I don't understand why am having such trouble. Can anyone please help? Thanks.

[delite]

Try 6.07%

[Alex_Sierra]

:eek: I have to find the coupon rate on a bond but every formula I find requires the coupon rate to already be configured. How do I work backwards to get what I need?

Example problem - Samantha's bonds sell for $1065.15. The bond life is 9 years and the yield to maturity is 7 percent. What must be the coupon rate on the bonds?

To look at it - it seems so simple. I don't understand why am having such trouble. Can anyone please help? Thanks.

It`s sounds easy,I hope this help you,The price of a bond in the very simple form is P=Fr*(an) + c*(v^n)
Where Fr=the product of the par value and the rate of the coupon and (an) is the annuity due and v^n it`s the discunt factor i.e v^n=1/(1+i)^n,n number of coupons or periods(term of the bond)
and c is the redemption value that is normal to be equal to the par value if is not especified. Then ( p-c*v^n)/(an)=r
remember that r will be the effective rate,to have the convertible for period just find the quotient r/k where k is the periodicity