A. Suppose today a 15 percent coupon bond sells at par. Two years from now, the

Question

A. Suppose today a 15 percent coupon bond sells at par. Two years from now, the required return on the same bond is 13 percent. The coupon rate in two years would be ______ percent and the YTM would be ______ percent. (Do not include the percent signs (%).)

B. Kiss the Sky Enterprises has bonds on the market making annual payments, with 14 years to maturity, and selling for $794.53. At this price, the bonds yield 12 percent. The coupon rate on the bonds is _____ percent. (Do not include the percent sign (%). Round your answer to 1 decimal place. (e.g., 32.1))

Explanation / Answer

For the first part: the coupon rate will forever be constant so the first blank is 15 the YTM is the same as the required return rate so its 13 second part has not enough information.

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