Suppose a 5-year, $1000 bond with annual cupons has a price of $1050 and a yields to maturity of 6%. What is the bond’s coupon rate?

To calculate the bond's coupon rate, we use the bond pricing formula:

\[
\text{Bond Price} = \sum_{t=1}^{T} \frac{C}{(1 + r)^t} + \frac{F}{(1 + r)^T}
\]

Where:
- $ C $ is the annual coupon payment.
- $ r $ is the yield to maturity (6% or 0.06).
- $ T $ is the time to maturity (5 years).
- $ F $ is the face value of the bond ($1000).
- Bond price is $1050.

To solve for the coupon rate $ C $, we need to rearrange the formula to express $ C $ in terms of

Learn how to calculate the coupon rate of a $1000 bond with a 5-year maturity, priced at $1050 and a yield to maturity of 6%. Understand the bond pricing formula and its application in financial calculations.

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