Results 1 to 3 of 3

Math Help - Coupon Rate

  1. #1
    Member
    Joined
    Nov 2007
    Posts
    232

    Coupon Rate

    Corporate bonds are selling today for $1003.17 and mature in 3 years (interest annually) with YTM of 6.63%. Find the coupon rate.

    P = c * \frac{{1 - \frac{1}{(1+YTM)^n}}}{YTM} + f * \frac{1}{(1+YTM)^n}

    where P = price, c = coupon value, f = face value

    1003.17 = c * \frac{{1 - \frac{1}{(1.0663)^3}}}{.0663} + f * \frac{1}{(1.0663)^3}

    I can't seem to isolate c and f as a fraction to calculate for the coupon rate: Coupon Rate = \frac{c}{f}
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Newbie
    Joined
    Mar 2009
    Posts
    10
    Quote Originally Posted by Macleef View Post
    Corporate bonds are selling today for $1003.17 and mature in 3 years (interest annually) with YTM of 6.63%. Find the coupon rate.

    P = c * \frac{{1 - \frac{1}{(1+YTM)^n}}}{YTM} + f * \frac{1}{(1+YTM)^n}

    where P = price, c = coupon value, f = face value

    1003.17 = c * \frac{{1 - \frac{1}{(1.0663)^3}}}{.0663} + f * \frac{1}{(1.0663)^3}

    I can't seem to isolate c and f as a fraction to calculate for the coupon rate: Coupon Rate = \frac{c}{f}
    First, isolate C. After that, you should only have C on the left hand side. Then divide both sides by f.
    Follow Math Help Forum on Facebook and Google+

  3. #3
    Member
    Joined
    Nov 2007
    Posts
    232
    \frac{1003.17 - \frac{1}{(1.0663)^3)}f}{\frac{1 - \frac{1}{1.0663^3}}{.0663}} = c

    20.9297073f = c

    20.9 = \frac{c}{f}

    That's the number I get and it's wrong, what am I doing wrong?
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Communication channel: baud rate, bit rate, etc.
    Posted in the Math Topics Forum
    Replies: 2
    Last Post: July 3rd 2011, 08:16 AM
  2. Replies: 3
    Last Post: October 15th 2009, 12:43 AM
  3. Bond Pricing - Changing Coupon
    Posted in the Business Math Forum
    Replies: 3
    Last Post: September 25th 2009, 04:43 PM
  4. principal and coupon payment
    Posted in the Business Math Forum
    Replies: 0
    Last Post: June 26th 2009, 12:48 PM
  5. Interest rate (pa) of a zero-coupon bond
    Posted in the Business Math Forum
    Replies: 3
    Last Post: September 15th 2008, 08:06 PM

Search Tags


/mathhelpforum @mathhelpforum