Answer to Question #122211 in Macroeconomics for Joby George

Question

Consider a bond with face value of $1000 due to mature in one years time. Its current price is $1035 the current interest rate is 5.8%. its coupon is?

Answer 1

since this is a coupon bond, the price of the coupon bond is as follows

coupon is an unknown number and there will be x

$\frac{x\times1000}{1.058}+\frac{1000}{1.058}=1035$

x=0.09503

coupon is 95.03