6-1 A 10-year Treasury bond is issued with face value of $1,000, paying interest

Question

6-1

A 10-year Treasury bond is issued with face value of $1,000, paying interest of $72 per year. If market yields increase shortly after the T-bond is issued, what is the bond’s coupon rate? (Enter your answer as a percent rounded to 1 decimal place.)

  Coupon rate

%

A 10-year Treasury bond is issued with face value of $1,000, paying interest of $72 per year. If market yields increase shortly after the T-bond is issued, what is the bond’s coupon rate? (Enter your answer as a percent rounded to 1 decimal place.)

Explanation / Answer

The coupon rate remains constant and is unchanged. It is not affects by movement of market yields.

Coupon rate = 72/1000 = 0.072 = 7.2%

Coupon rate = 7.2%

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