Question

Calculate the annual coupon payment if the semi-annual coupon paying bond price is $920, the yield for the bond is 6%, the bond's face value is $1,000 and matures in 9 years.

Answer 1

FV: 1000
PV: -920
I/Y: 6/2= 3
N: 9(2)= 18
CPT PMT: 24.1833

this payment is for semi annually, the question asks for annual so:
24.1833(2)= 48.37

Answer 2

The  annual coupon payment  is $48.40.

Annual coupon payment

Yield = 6%

Rate = Yield/2 = 6%/2 = 3%

YTM = 9

Nper = YTM×2 = 9×2 = 18

Face value = $1,000

Price(PV) = $920

Monthly payment = PMT(0.03, 18, -920, 1000)

Monthly payment = $24.1833

Coupon rate = (PMT/Face value) ×2

Coupon rate = (24.1833/1000) × 2

Coupon rate = 0.0241833 × 2

Coupon rate = 0.0483666×100

Coupon rate = 4.84%

Annual coupon payment = Face value ×Coupon rate

Annual coupon payment = $1000 ×4.84%

Annual coupon payment = $48.40

Inconclusion the  annual coupon payment  is $48.40.

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