Bond Coupon Rate

A company has bonds outstanding with 7.5 years to maturity. The YTM is 8.8% with semi-annual payments. The bonds is currently selling at 114% of par.

A) Find the coupon rate of the bonds.

B) Two Years Later, the YTM has decreased to 8.3%. You just received a coupon payment and have decided to sell the bond. What's your holding period return?

Students must calculate the results using Financial Calculator*. Excel is not allowed.

* For the EL-738 calculator, there are four major vaslues: I/Y, N, PV, FV, PMT (PMT in this case is the coupon payment). Knowing any four of them allows for the calculation of the fifth. For this question, N = 8.8/2 = 4.4%; and 1/Y = 7.5 x 2 = 15