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How to find the required rate of return for a coupon bond?

Given the present value, coupon rate, face value, and term of a coupon bond, is there any easy way of finding the required rate of return without guessing or using a computer to find it for you?

Here is an example:

I am given that the present value of the bond is $105.35, the coupons are paid annually and are 8%, that the face value is $100.00 and that there are three years left to maturity (with the next payment being one year from now).

I get from this the equation Attachment 23831

How do I find k?

Re: How to find the required rate of return for a coupon bond?

Can't be solved directly; numeric method required

Works a bit like a loan:

Code:

`YR PAY'T INT BALANCE`

0 105.35

1 -8.00 ? ?

2 -8.00 ? ?

3 -8.00 ? 100.00

You can tell that interest has to be lesser than 8%;

6% will do it: try it!