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O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 20 years. Their...

O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 20 years. Their nominal yield to maturity is 8.75%, they pay interest semiannually, and they sell at a price of $900. What is the bond's nominal (annual) coupon interest rate?

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Answer #1
                  K = Nx2
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2
                   k=1
                  K =20x2
900 =∑ [(Coupon rate*1000/200)/(1 + 8.75/200)^k]     +   1000/(1 + 8.75/200)^20x2
                   k=1
Coupon rate% = 7.68
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